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Weather Forecasting
• Weather forecasters use probability to determine the likelihood of rain, wind, snow,
clouds, etc. on a given day in a specific area. For example, forecasters may say things like
“there is a 70% chance of rain today between 4 PM and 6 PM” to indicate a medium to
high likelihood of rain during certain hours.
• Probability helps in understanding long-term climate patterns and changes. For example,
estimating the probability of extreme weather events under different climate scenarios
aids in planning and mitigation efforts.
Traffic Estimation
• People often use probability when they decide to drive to someplace. Vehicular
traffic flow is examined and an estimated vehicle waiting time in each direction is
estimated through probability.
• Based on the time of day, location in the city, weather conditions, etc. people tend to
make probability predictions about how bad traffic will be during a certain time. For
example, if you think there’s a 90% chance that traffic will be heavy from 6 PM to 7:30
PM in your vicinity then you may decide to wait during that time.
Finance
• Probability is used to assess the risk of investments and financial decisions. For
example, calculating the probability of a stock’s return falling within a certain
range helps investors make informed decisions.
• Probability models help investors spread their investments across different assets
to reduce risk. For example, by looking at the chances of returns for various
investments, investors can build a balanced portfolio.
• Probability is crucial in figuring out insurance costs and how policies are structured by various insurance agencies.
For example, actuaries use probability to predict events like accidents or natural disasters and set insurance
premiums based on those chances.
Medicine
• Probability helps in understanding how diseases spread and how well
treatments work.
For example, by estimating the chance of disease transmission in different
situations, we can better plan public health measures.
• Probability is used to determine the effectiveness of new treatments or drugs.
For example, researchers calculate the probability that observed treatment
effects are due to the drug rather than random chance.
Education
• Probability is used to estimate how well students perform in exams
based on different factors.
For example, considering study habits and attendance can predict
the chances of students getting certain grades.
• Probability helps create fair and accurate standardised tests.
For example, figuring out the chances of different scores in tests, it
can better reflect how well students understand the subject taught.
Maths for AI (Statistics & Probability) 191

