Risk appetite and tolerance setting
Boards and public bodies state their objectives, the outcomes they will not accept and the evidence that would trigger escalation, using structured elicitation so trade-offs are recorded rather than implied.
GRF · Governance Nexus
Decision analysis for governing bodies
Decision analysis under uncertainty makes the choices of governing bodies explicit: the options, the objectives they trade off, the uncertainties and the values that decide. In governance work it supports risk appetite setting, mandate design and the question of when to act now and when to keep options open.
01Contents
Decision analysis for governing bodies in five parts.
02Application
What decision analysis under uncertainty does here.
Decision analysis under uncertainty provides structured methods for choosing among options when outcomes are uncertain and objectives conflict. It makes trade-offs and value judgements explicit. In governance and institutions and risk management and systemic risk, decision analysis helps choose actions that perform acceptably across interconnected risks and uncertain futures. It clarifies when to act now and when to keep options open. The canonical description is on the STEM Commons.
Multi-criteria appraisal of institutional options
Alternative designs for a regulator, council or coordination body are compared against criteria such as independence, competence, legitimacy and cost, with the weights and their sensitivity shown.
Adaptive pathways for governance reform
Reforms are sequenced as pathways with decision points and signposts, so governing bodies can commit to first steps while keeping later choices open as evidence arrives.
03Monitor
Uncertainty analysis.
The screen a team would use to follow this method: its measures, states and decisions. Names are examples and values are illustrative.
Uncertainty analysis
Governance · Decision analysis for governing · Run R-4542
Sensitivity rankedGRF · Governance Nexus
Total-order sensitivity
Output distribution
Inputs
| Decisions recorded with reasons | Lognormal | of decisions, stated | expert elicitation |
| Conflicts declared | Lognormal | declarations, stated | expert elicitation |
| Board risk reviews held | Lognormal | reviews, stated | expert elicitation |
| Capture safeguards in place | Uniform | of 12, stated | expert elicitation |
04Data
What the method consumes.
Datasets and records used by decision analysis under uncertainty on this platform, with the role each plays and the label its values carry. Sources are listed in the source register.
| Data | Role | Label |
|---|---|---|
| Structured expert elicitation | Probabilities and judgements where records are thin | ESTIMATED |
| Stakeholder preference surveys | Weights on objectives | REPORTED |
| Records of comparable decisions | Reference classes for outcomes | Published statistics |
| Scenario sets | Range of futures for robustness testing | MODELLED |
05Instruments and commitments
How decision analysis for governing bodies is governed: instruments, mandates and commitments.
The instruments, mandates, actors and accountability arrangements a policymaker, diplomat or development agency works with, citing the agreements that set them. Structures follow the frameworks named. Any state or progress drawn is illustrative, not a record.
Policy instrument matrix
The kinds of instrument available on decision analysis for governing bodies, by level of government and cooperation.
| Instrument type | Local | National | Regional | Global |
|---|---|---|---|---|
| Regulatory | Zoning, building codes | Laws, standards, licensing | Harmonised rules | Conventions and treaties |
| Economic | Local levies, grants | Budget lines, taxes, insurance schemes | Risk pools, regional funds | Financing mechanisms |
| Information | Local warnings | Disclosure, early warning, statistics | Data sharing arrangements | Global monitoring and reporting |
| Institutional | Local committees | Lead agencies, coordination councils | Regional bodies and secretariats | Multilateral mandates |
| Cooperative | Community agreements | Partnership compacts | Memoranda and joint programmes | Agreements and joint commitments |
Sendai Framework for Disaster Risk Reduction · UNDRRParis Agreement · UNFCCC2030 Agenda and the Sustainable Development Goals · United NationsInternational Health Regulations · WHO
06Validation
How results are checked.
Analyses are checked through sensitivity analysis, peer review and stakeholder scrutiny. Retrospective review compares decisions with outcomes.
| Check | How it is done |
|---|---|
| Sensitivity analysis | Weights and probabilities are varied to show which assumptions change the preferred option |
| Elicitation protocol | Experts are briefed, calibrated and asked independently before any group discussion |
| Retrospective review | Past decisions are compared with outcomes, separating poor judgement from bad luck |
Results depend on elicited probabilities and preferences that may be biased. Deep uncertainty can make expected value comparisons misleading.
07Process
How the process runs.
Process explorer · Process
Decision analysis for governing bodies: Hazard, exposure, vulnerability
10 steps·4 stages
Process
Decision analysis for governing bodies: Hazard, exposure, vulnerability
In IPCC AR6 Working Group II, climate risk results from interactions between hazards and a system's exposure and vulnerability, and responses can add risk.
01 Drivers
- 01HazardDataset · Council secretariatThe potential occurrence of a natural or human-induced physical event or trend that may harm people, property, services or ecosystems.
- 02ExposureDataset · Council secretariatThe presence of people, livelihoods, species, ecosystems, infrastructure or assets in places and settings that could be adversely affected.
- 03SensitivityDataset · Council secretariatThe degree to which a system or species is affected, either adversely or beneficially, by climate variability or change.
- 04Capacity to cope and adaptDataset · Council secretariatThe ability of systems, institutions, humans and other organisms to adjust to damage, take opportunities or respond to consequences.
02 Assessment
- 05Risk from responsesComponent · Council secretariatRisks from climate responses arise when responses miss their objectives, or from trade-offs or negative side effects.
- 06VulnerabilityComponent · Council secretariatThe propensity or predisposition to be adversely affected. It includes sensitivity to harm and lack of capacity to cope and adapt.
- 07RiskModel · Governance NexusRisk results from dynamic interactions between hazards and the system's exposure and vulnerability. Each may be uncertain and change.
03 Response
- 08Risk management and responseStep · Council secretariatRisk management is plans, actions, strategies or policies that reduce the likelihood or size of adverse consequences.
- 09Residual riskRecord · Council secretariatThe climate impact risk that remains after adaptation and mitigation efforts. Adaptation can redistribute risk between areas and groups.
04 Decision
- 10Decision by the responsible partyDecision · Council secretariatThe framing names no single decision maker. Decisions on responses rest with the responsible party under its own rules.
Outline of an external standard or method, from its public sources. It describes what the framework says, not a record of any run. It does not show that Nexus or any partner performs, certifies or approves a step. A gate is a step of the method, never a Nexus approval.
09Stewardship
Who maintains the method.
Systemic Risk Management stewards decision analysis under uncertainty for the Consortium and reviews how it is applied across platforms.
10Connected
Where this page leads across the Consortium.
11Questions
Questions and answers.
What are the limits of decision analysis under uncertainty in this field?
Results depend on elicited probabilities and preferences that may be biased. Deep uncertainty can make expected value comparisons misleading.
How are results checked?
Analyses are checked through sensitivity analysis, peer review and stakeholder scrutiny. Retrospective review compares decisions with outcomes.
Are the values on this page real?
The data names, roles and checks are real descriptions of practice. The canvas shows a design of the method's use, not a run; no result is reported here.
Where else is this method applied?
The canonical method page lists every platform that applies it.
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