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The calculation of risk in public investment (Policy Brief 233 - July 2011)

The calculation of risk in public investment (Policy Brief 233 - July 2011)

18/07/11

Every decision involves some uncertainty and involves risk taking, both individual and collective level. Prevention and risk management in recent years and are the major themes of public debate, particularly with regard to the implementation of effective and reasonable precaution.

Many questions arise: how to define an acceptable risk or optimal prevention? How to organize society to effectively manage risk? What is in this context the role of the state? They are critical in the evaluation of investment projects (agriculture, health, transport, energy, environment, etc..). The expected benefits of these investments are they sufficient to the risks which they are associated costs and the need of obtaining it? All is not acceptable and indeed even less affordable.

The issue of objectification and evaluation issues, such as risk measurement within a scientific framework often very uncertain, becomes central. One of the things that are difficult - the theory is still tentative and underdeveloped practices - is the way to integrate operational risk and uncertainty in economic calculations. Although they are imperfect, significant theoretical advances have been made however in recent years that economic calculation must take into account: this is the condition that he can inform public debate and an essential tool of public decisions.

Contents:

  • The general context: risks, uncertainties and public evaluations
  • Distinguish between the various risk
  • Integrate probabilities in assessing
  • Enrich the analysis of risk
  • General posture of risk control
  • Authors: Luc Baumstark , Dean, Faculty of Economics and Management, Lyon II Pierre Fery, Directorate General of Treasury, Christian Gollier , director of the Toulouse School of Economics (TSE) With the help of Dominique Auverlot and Christine Raynard , Sustainable Development Department

Press Contact:
Jean-Michel Roullé, Head of Communications
Tel. + 33 (0)1 42 75 61 37 - jean-michel.roulle@strategie.gouv.fr

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