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Potential surprise theory as a theoretical and practical cornerstone of the uncertainty-based perspective on risk
Derbyshire, James
Derbyshire, James
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2026-05-14
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From all the knowledge that would emerge as relevant to it over infinite time, a risk analysis must be based on the cross-section available at its undertaking. This creates a knowledge gap, which can lead to surprises. To address a similar problem in economic decision-making, G. L. S. Shackle developed Potential Surprise Theory (PST). PST’s focus is on decisions that take the form of crucial, self-destructive experiments, which destroy and radically remake the possibility space. Such decisions turn the kaleidic economy, the ceaseless shape-shifting of which precludes absolute foreknowledge of all its possibilities. This dynamism means that the exhaustive listing of all possibilities required to assign probabilities necessitates the use of what Shackle called a ‘residual hypothesis’ to represent all presently unknown scenarios. Yet, there is no way to know what probability to assign to this residual. PST overcomes this problem by employing a non-probabilistic and non-additive measure of uncertainty. PST has much to offer the uncertainty-based perspective on risk, yet proponents of that perspective have been curiously inattentive to it. This paper rectifies that by: (1) showing how PST overcomes the residual-hypothesis problem that is foundational to risk analysis; (2) juxtaposing PST and expected utility theory; (3) illustrating the nature of crucial experiments in risk analysis; (4) describing PST’s language of possibility and its focus on surprises and extremes; and (5) discussing PST’s operationalisation in a risk analysis. In summary, PST can serve as a practical and theoretical cornerstone of the uncertainty-based perspective on risk.
Citation
Derbyshire, J. (2026). Potential surprise theory as a theoretical and practical cornerstone of the uncertainty-based perspective on risk. Risk Analysis, 46(6), e70262. https://doi.org/10.1111/risa.70262
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Wiley
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Risk Analysis
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© 2026 The Author(s). Risk Analysis published by Wiley Periodicals LLC on behalf of Society for Risk Analysis.
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0272-4332
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1539-6924