Highly probable

IFRS Definition –  Highly probable: Significantly more likely than probable.

IFRS Definition –  Probable: More likely than not.

Other probability qualifications used in IFRS Standards are: Unlikely, Highly unlikely, Highly likely, Likely, More likely than not, Most likely, More likely and Virtually certain.

Looking at the statistical data below, highly probable would be equivalent to almost certain in the shortened gradation. But almost certain has a negative connotation in the prudent world of accounting. However, in accounting differentiation in probabilities remains a professional judgement consideration, except for statistical sampling.

Here is the source.

Virtually certain – ‘Virtually certain’ is used but not defined in IAS 37 but it is certainly a much higher hurdle than ‘probable’ and, indeed, more challenging than the term ‘significantly more likely than probable’ in Appendix A of IFRS 5 Non-current assets held for sale and discontinued operations. It is reasonable to interpret virtually certain to be as close to 100% as to make any remaining uncertainty insignificant. What this means in practice is that each case must be assessed on its own merits and any judgement should be made in the knowledge that, in any event, it is rarely possible to accurately assess the probability of the outcome of a particular event. However, to the extent that the inflow of economic benefits is probable (the event is more likely than not to occur), IAS 37 requires disclosure of the contingent asset.


Just to get a feeling about these different probabilities a more mathematical look at this subject.

This is a chart showing an experiment with 23 Nato officers asking what they understood by different terms expressing probability such as “almost certainly”, “we doubt” and “almost no chance”.

The visualisation, which surfaced on Reddit, was inspired by the work of pioneering intelligence analyst Sherman Kent.

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The officers were asked to assign a percentage of probability to what they understood by the different phrases. The dots on the chart are their answers, while the grey shaded areas are roughly the ranges that Kent said should cover the probability of each description.

As you can see there is considerable discrepancy between how the different officers answered. This was a key issue to Kent’s work. In a seminal 1964 piece outlining the issue, he talked of an “early brush with ambiguity”.

The analysis started with a report about the probability of an invasion of Yugoslavia in 1951. It concluded: “Although it is impossible to determine which course the Kremlin is likely to adopt, we believe that the extent of satellite military and propaganda preparations indicates that an attack on Yugoslavia in 1951 should be considered a serious possibility.”

A few days after the estimate appeared, I was in informal conversation with the policy planning staff’s chairman. We spoke of Yugoslavia and the estimate. Suddenly he said: “By the way, what did you people mean by the expression ‘serious possibility’? What kind of odds did you have in mind?” I told him that my personal estimate was on the dark side, namely, that the odds were around 65 to 35 in favour of an attack. He was somewhat jolted by this; he and his colleagues had read “serious possibility” to mean odds very considerably lower.

In a military intelligence environment these semantic misunderstandings based on wording could have a serious impact; namely, action being taken or not based on overestimations or underestimations of the content of intelligence reports.


To deal with this, Kent and a colleague created different gradations of probability. To each they assigned a percentage range:

Certainty: 100%
Almost certain: 93% (give or take about 6%)
Probable: 75% (give or take about 12%)
Chances about even: 50%
Probably not: 30% (give or take about 10%)
Almost certainly not: 7% (give or take about 5%)


General model of measurement of insurance contracts

Highly probable

Highly probable

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