Geostatistical Simulations for Risk Assessment and Decision Making: The Mining Industry Perspective

Decision making requires definition of objectives and detailed understanding of the project under study. The options available to the decision maker must be understood, as well as how the project could be improved by choosing these options. A method must be defined to measure the ‘utility’ of a project. This utility is a function of ‘critical indicators’, whose value depends on ‘controlling parameters’. A variety of simulation techniques can be used to assess the probability distribution of the project utility, depending on which options are chosen. Risk can be reduced by acquiring more information, choosing flexible engineering solutions, improving managerial or technical expertise, or sharing risk with others. The best option is that which results in maximum expected utility. Geostatistical simulation plays a critical role in evaluating geologic risk, but the limitations of geostatistical simulation must not be forgotten: It only models some of the risk. To fully assess the expected utility of a project, deposit simulation must be combined with simulation of all other controlling parameters.