Calibration Exercises

When we humans make statements about future events, it is inherently subject to uncertainty. A risk assessment tries to understand future loss events and is therefore also subject to uncertainty. The less historical data or measurements, the greater the uncertainty.

Being able to provide ranges that take uncertainty into account is crucial for a risk assessment. It is a technique that anyone involved in risk assessment must learn and master.

These exercises train you to produce intervals that take uncertainty into account. In the exercises below, you will be trained or calibrated to specify a “90% confidence interval”.