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that risk management decisions could not simply be made by technical
experts and public offi cials. Risk communication is now viewed as being a
dialogue among interested parties - risk experts, policy makers, and affected
segments of the public.
This is particularly important for issues related to highly uncertain events
with potentially catastrophic loss to the society (e.g. natural disasters,
nuclear policy, and infectious and unfamiliar diseases). For such risks, sci-
entifi c/technical assessments among the experts vary widely. Furthermore,
risk perception by the public can be considerably far from estimates by the
experts. The driving factors of such disparity of opinions include uncertainty,
fear, dreadfulness, and irreversibility. Starr and Whipple (1980) argued that
although decisions related to public policies should be based on experts'
judgments, controversies may arise due to differences in (probabilistic)
assessments between the public and the experts, and such reactions may
overrule the experts' decisions through the political process. Therefore,
signifi cance of risk communication in the context of earthquake risk man-
agement should not be underestimated.

6.4 Risk management

The risk management is a process of weighting alternatives (options) and
selecting the most appropriate action by integrating the results of risk
assessment with engineering data as well as social/economic/political factors
to reach an acceptable decision. Generally, risk assessment/analysis process
involves objectivity, whereas risk management involves preferences and
attitudes which have both objective and subjective elements. Two options
that can be combined in an overall risk management strategy are (Paté-
Cornell 1996):

1. reducing expected loss by implementing preventive or mitigation mea-
sures; and
2. insurance and loss sharing in case of an accident (or a damaging
earthquake).

The choice of particular retrofi t technique or consideration of insurance
will depend on the owner's fi nancial resources and risk tolerance. In the
following, the current practice in the risk management through insurance
(risk transfer) and multiple criteria decision making in the consideration of
seismic retrofi tting are discussed.

6.4.1 Risk transfer (insurance)

Insurance is a risk transfer instrument for economic/fi nancial consequences
and smoothes out fl uctuation/variability of a stakeholder's asset caused by