This Website's URL: http://www.princeton.edu/~evm/civ360&548.html

SPRING 1998

CIV 360/548: Risk Assessment and Management

Prof. Erik VanMarcke

Class Meets MW 1:30-2:50pm in Rm E-225

• Graded end-of-term exams will be put in the "out-box" on Wednesday, May 13, along with a set of solutions. For information about the grade distribution, see the first page of the solutions posted on the Bulletin Board next to E-406 on the Fourth Floor, E-wing, E-Quad.
• Final project reports can be picked up from the "out-box" (or, after it's gone, from Zoya Kramer's office, ACE-45, E-Quad) after May 22. Enjoy the summer!

Course Information

Outline of Topics & Reading Assignments

Graded-Homework Assignments (Click on Number):

1 (Feb. 11); 2 (Feb. 18); 3 (Feb. 25); 4 (March 2); 5 (March 25); 6 (April 1); 7 (April 8); 8 (April 15)

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CIV 360/548 -- Spring 1998

COURSE INFORMATION

Instructor

Professor Erik VanMarcke
Room: E-403; Phone: x5896; E-mail: evm@princeton.edu
Webpage (F.Y.I.): http://www.princeton.edu/~evm
Office Hours: Wednesdays, 11-12am

Secretary: Ms. Zoya Kramer
ACE-45 (Corner Office, 4th Floor, E-Quad); Phone: x6758

Assistant-in-Instruction

H. Elcin Yildirim
Office: 422 Jadwin; Phone: x5934; E-mail: elcin@princeton.edu
Office Hours: to be announced.
Elcin will run a "help session" on Mondays at 8pm, (tentatively) in E-225.

Aims of the Course

To become acquainted with: the fundamentals of integrated risk assessment and risk-based decision analysis; stochastic modeling of natural and man-made hazards; evaluation of failure chances and consequences; decision criteria and acceptable risk; methods of risk assessment and management based on event trees, fault trees, system reliability, and stochastic processes in space and time; and issues involving risk-based regulation, liability, and insurance. To gain practical experience through case studies involving energy-related technologies, health and the environment, civil infrastructure and financial risk. Mixture of lectures (on Mondays) and lab/precepts (on Wednesdays).

Prerequisites

CIV 245 (Fundamentals of Engineering Statistics) or equivalent
CIV 309 (Probability & Simple Random Processes) or equivalent.

Text/Notes

A packet of course materials will be available, as of Thursday, February 5, at Pequod (6 Nassau Street, Princeton); a one-time charge ($17) covers this and all future handouts, which will be distributed in class. Some course materials, such as homework assignments, will be made available (only) at this Website.

Web Address for the Course

(This website:) http://www.princeton.edu/~evm/civ360&548.html

Course Requirements & Grading Policy

• Expect around 8 to-be-graded homeworks. In addition, there will be some optional assignments, not subject to grading.
• In-class midterm and end-of-term exams (75 minutes each); no "final".
• Individual or team final project, due on Monday, May 11.
• Add-on requirements for graduate credit (available only to graduate students) will be specified in class.
• Final grades will be computed based on the formula:
  20% homework + 50% midterms + 30% project

Handling of Assignments and Solutions

• To-be-graded-homework assignments will be posted on the Web. Click on the number (corresponding to date of issue) under "Graded-Homework Assignments" in the main menu.
• Graded homeworks and exams will be returned in class; leftovers can be picked up in the CIV 360/548 "Out Box" in the Student Lounge (E-Wing, E-Quad).
• After graded homeworks are returned, solutions will be posted on the Web. Again, click on the number (corresponding to date of issue) under "Solutions" in the main menu.

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CIV 360/548 -- Spring 1998

OUTLINE OF TOPICS & READING ASSIGNMENTS

Week of February 2

• Lecture topics: Risk assessment and management: needs, scope, terms. Types of hazards and consequences. Types of systems. Decision situations. Interdisciplinary nature. Perspectives on risk: legal, regulatory, actuarial. Overview of applications to natural hazards, the environment, civil infrastructure, and finance.
• No precept, i.e., no class on Wednesday.
• Reading Assignment: Pages 5 through 14 in packet of course notes: Review of Elementary Probability.
• Optional Homework Assignment: Web search for materials on, and data relevant to, risk assessment; this assignment will not be graded. The results will later be put together for the benefit of the class and posted on this website.

Week of February 9

• Lecture topics: Interpretations of probability: frequentist, subjective. Information processing by Bayesian analysis. Event trees; conditional probability. Biases in (subjective) probability estimation and expert opinion. Problems estimating small probabilities. Perception of risk.
• Precept 1: Detection of "solution cavities" in limestone areas.
• Reading Assignment: Pages 26 through 33 in course notes packet (includes precept notes). The homework requires use of elementary-probability formulae on pp. 8 and 9.
• Homework 1

Week of February 16

• Lecture topics: Tools of risk analysis (I): functions of random variables; algebra of expectation; correlation. [Skipped: Optimum linear prediction and updating.] Elementary reliability analysis involving random loads (exposure) and resistances (vulnerability). Extreme-value probability models.
• Precept 2. Uncertainty in construction cost estimation; risks in bidding.
• Reading Assignment: Pages 34 through 41 in course notes packet (precept notes). See also material on sums ands extremes of random variables (pp. 12/13) and on means and variances (pp. 13/14) and on expectations involving sums of random variables (page 16, in particular, page 42 in the Random Fields book). The Gaussian (normal) distribution is described on page 19, and the Standard normal cumulative distribution is tabulated on page 20.
• Homework 2

Week of February 23

• Lecture topics: Tools of risk analysis (II). Classical system reliability analysis: series, parallel and mixed systems. Block diagrams. Fault tree analysis.
• Precept 3: Environmental site remediation (pp. 48-52)
• Reading Assignment: Pages 42 through 52 in packet of course notes packet, covering system reliability (pp. 42-44), fault tree analysis (pp. 45-47), and precept notes (pp. 48-52).
• Homework 3

Week of March 2

• Lecture topics: Risk management as decision analysis. Elements: costs, risks, relative risks, effectiveness of risk reduction, decision criteria. Classical utility theory. Value of information. "Risk cost"; risk aversion. Acceptable risk. Multi-attribute decisions.
• Precept 4: Integrated risk assessment/management for dams.
• Reading Assignment: Pages 63 to 91 (background material on Statistical Decision Theory), an example of which will be covered in class (pp. 92-94); background reading on Acceptable Risk (pp. 95-110), and precept notes (pp. 111-124), of which pp. 116-124 are particularly important.
• Homework 4 (issued on March 2; due on Monday, March 9)

Week of March 9

• Lecture topics: Integrated risk assessment/management. Multiple hazards and consequences. Modeling failure-event topology and chronology. Event tree, fault tree, and system reliability approaches. Decisions on siting, design, monitoring. Prioritizing groups of structures, such as dams or bridges, for remedial action.
• Wednesday, March 11: MIDTERM EXAM

Week of March 23

• Lecture topics: Temporal dependence of risk and vulnerability. Poisson and point processes. Sums and extreme values of a random number of random effects. Hazard functions. Cumulative damage. Modeling natural hazards: sources of data, scale effects, expressing uncertainty.
• Precept 5: Site risk analyses for extreme natural events (earthquakes, wind, floods).
• Reading Assignment: Pages 125 through 149 in packet of course notes
• Homework 5: term paper proposal (assignment issued on March 25; due on Wednesday, April 9)

Week of March 30

• Lecture topics: Continuation: modeling temporal dependence. Simulation in risk assessment. Generating "scenarios".
• Precept 6: Estimating financial losses due to natural events. Insurance and reinsurance. Multi-Hazard Assessment: Risk of Collapse of Radio Towers
• Reading Assignment: Handouts #1 (Extreme Values) and #2 (Risk of Collapse of Radio Towers)
• Homework 6

Week of April 6

• Lecture topics: Markov models and Markov decision analysis; reward matrices; expected future expected losses. Multi-state Markov modeling of damage, deterioration, and failure.
• Precept 6: (1) Probabilistic Risk Analyses (PRA's) for nuclear plant installations; (2) Markov modeling of genetic-disease progression (case: colon cancer).
• Reading Assignment: Pages 150 to 169 in packet of course notes. Also pp. 170-183: background for precept on nuclear plant safety
• Homework 7

Week of April 13

• Lecture topics: Random-process and random-field models in risk assessment. Questions of scale, aggregation, temporal and spatial correlation, sensitivity to local extremes. Scale of fluctuation. Vulnerability of complex systems.
• Precept 8: Financial risk assessment: modeling interest rate and stock price fluctuations; pricing catastrophe bonds; hedging strategies.
• Reading Assignment: Pages 184-191 in the packet; also pp. 5-7 and pp. 192-197 for an overview of key concepts and applications of random fields.
• Homework 8

Week of April 20

• Lecture topics: Random field models (continued). Stochastic-growth models. Correlation and complexity owing to "genetic dependence"
• Precept 9: (Focus on spatial variation and scales of fluctuation) Risk-based Corrective Action (pp. 53-62). Radon risk throughout New Jersey.
• Reading Assignment: Handout (32 pages) on random field modeling

Week of April 27

• Lecture topics: Overview of methods of risk assessment/management. Research needs and opportunities.
• Wednesday: END-OF-TERM EXAM

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