{{Short description|Possibility of something bad happening}} {{Other uses}} [[File:3 Alarm Building Fire.jpg|thumb|upright=1.35|Firefighters are exposed to risks of fire and building collapse during their work.]]
'''Risk''' is the possibility of something bad happening,<ref name="Cambridge">{{Cite web |url=https://dictionary.cambridge.org/dictionary/english/risk |title=Risk |website=Cambridge Dictionary}}</ref> comprising a level of uncertainty about the effects and implications of an activity, particularly negative and undesirable consequences.<ref name="SRA2018">{{cite web |title=Glossary |url=https://www.sra.org/sites/default/files/pdf/SRA%20Glossary%20-%20FINAL.pdf |publisher=Society for Risk Analysis |access-date=13 April 2020 |archive-date=21 December 2018 |archive-url=https://web.archive.org/web/20181221011051/http://www.sra.org/sites/default/files/pdf/SRA%20Glossary%20-%20FINAL.pdf |url-status=dead }}</ref><ref name="ISO 31073">{{cite ISO standard |url=https://www.iso.org/obp/ui/en/#iso:std:iso:31073:ed-1:v1:en|title=ISO 31073:2022 — Risk management — Vocabulary}}</ref>thumb|Harbor sign warning visitors that use of the walkway is "at your own risk"
Risk theory, assessment, and management are applied but substantially differ in different practice areas, such as business, economics, environment, finance, information technology, health, insurance, safety, security, and privacy. The international standard for risk management, ISO 31000, provides general guidelines and principles on managing risks faced by organizations.<ref name="ISO31000">{{Cite web|url=https://www.iso.org/obp/ui/#iso:std:iso:31000:ed-2:v1:en|title=ISO 31000:2018 Risk Management - Guidelines|website=ISO|archive-url=https://web.archive.org/web/20260401101354/https://www.iso.org/obp/ui/#iso:std:iso:31000:ed-2:v1:en|archive-date=1 April 2026}}</ref> [[File:Impact_event.jpg|thumb|300x300px|Artist's impression of a major asteroid impact, an example of a global catastrophic risk.]]
== Definition == {{Update|part=section|date=September 2025|reason=ISO 31000}}
The Oxford English Dictionary (OED) cites the earliest use of the word in English (in the spelling of ''risque'' from its French original, 'risque') as of 1621, and the spelling as ''risk'' from 1655. While including several other definitions, the OED 3rd edition defines ''risk'' as "(Exposure to) the possibility of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such a possibility".<ref name="Cite OED|risk">{{Cite OED|risk}}</ref> The Cambridge Advanced Learner's Dictionary defines risk as "the possibility of something bad happening".<ref name="Cambridge" /> Some have argued that the definition of risk is subjective and context-specific.<ref name="SRA2018" /><ref>{{cite journal |last1=Fischhoff |first1=B |last2=Watson |first2=S.R. |last3=Hope |first3=C. |date=1984 |title=Defining Risk |journal=Policy Sciences |volume=17 |issue=2 |pages=123–139 |doi=10.1007/BF00146924 |s2cid=189827147}}</ref> The International Organization for Standardization (ISO) 31073 defines risk as:<ref>{{cite ISO standard|url=https://www.iso.org/obp/ui/en/#iso:std:iso:31073:ed-1:v1:en:term:3.1.1|title=ISO 31073:2022 — Risk management — Vocabulary — risk}}</ref><ref>{{cite ISO standard|csnumber=34998|title=ISO/IEC Guide 73:2002 — Risk management — Vocabulary — Guidelines}}</ref><blockquote>effect of uncertainty<ref><blockquote>state, even partial, of deficiency of information related to understanding or knowledge Note 1: In some cases, uncertainty can be related to the organization's context as well as to its objectives. Note 2: Uncertainty is the root source of risk, namely any kind of "deficiency of information" that matters in relation to objectives (and objectives, in turn, relate to all relevant interested parties' needs and expectations). </blockquote>{{cite ISO standard|url=https://www.iso.org/obp/ui/en/#iso:std:iso:31073:ed-1:v1:en:term:3.1.3|title=ISO 31073:2022 — Risk management — Vocabulary — uncertainty}}</ref> on objectives<ref><blockquote>result to be achieved Note 1: An objective can be strategic, tactical or operational. Note 2: Objectives can relate to different disciplines (such as financial, health and safety, and environmental goals) and can apply at different levels (such as strategic, organization-wide, project, product and process). Note 3: An objective can be expressed in other ways, e.g. as an intended outcome, a purpose, an operational criterion, as a management system objective, or by the use of other words with similar meaning (e.g. aim, goal, target). </blockquote>{{cite ISO standard|url=https://www.iso.org/obp/ui/en/#iso:std:iso:31073:ed-1:v1:en:term:3.1.2|title=ISO 31073:2022 — Risk management — Vocabulary — objective}}</ref> Note 1: An effect is a deviation from the expected. It can be positive, negative or both, and can address, create or result in opportunities and threats.<ref><blockquote>potential source of danger, harm, or other undesirable outcome Note 1: A threat is a negative situation in which loss is likely and over which one has relatively little control. Note 2: A threat to one party may pose an opportunity to another.</blockquote>{{cite ISO standard|url=https://www.iso.org/obp/ui/en/#iso:std:iso:31073:ed-1:v1:en:term:3.3.13|title=ISO 31073:2022 — Risk management — Vocabulary — threat}}</ref>
Note 2: Objectives can have different aspects and categories, and can be applied at different levels.
Note 3: Risk is usually expressed in terms of risk sources, potential events, their consequences and their likelihood.</blockquote>
Other general definitions include:
* "Source of harm" ::The earliest use of the word "risk" was as a synonym for the much older word "hazard", meaning a potential source of harm. This definition comes from Blount's "Glossographia" (1661)<ref>{{Cite book |last=Blount |first=Thomas |title=Glossographia, or, A dictionary interpreting all such hard words of whatsoever language now used in our refined English tongue |year=1661 |location=London}}</ref> and was the main definition in the OED 1st (1914) and 2nd (1989) editions. Modern equivalents refer to "unwanted events"<ref name="Stanford">Hansson, Sven Ove, [https://plato.stanford.edu/archives/fall2018/entries/risk/ "Risk"], ''The Stanford Encyclopedia of Philosophy (Fall 2018 Edition)'', Edward N. Zalta (ed.)</ref> or "something bad that might happen".<ref name="Cambridge" /> * "Chance of harm" ::This definition comes from Johnson's "Dictionary of the English Language" (1755), and has been widely paraphrased, including "possibility of loss"<ref name="Cite OED|risk" /> or "probability of unwanted events".<ref name="Stanford" /> * "Uncertain events affecting objectives" ::This definition was adopted by the Association for Project Management (1997).<ref>{{cite book |title=Project Risk Analysis and Management Guide |date=1997 |publisher=Association of Project Management}}</ref><ref>A Guide to the Project Management Body of Knowledge (4th Edition) ANSI/PMI 99-001-2008</ref> With slight rewording it became the definition in ISO Guide 73.<ref name="ISO 31073" /> * "Uncertainty of outcome" ::This definition was adopted by the UK Cabinet Office (2002)<ref>{{cite book |url=http://www.integra.com.bo/articulos/RISK%20IMPROVING%20GOVERMENT.pdf |title=Risk: Improving government's capability to handle risk and uncertainty |date=2002 |publisher=Cabinet Office Strategy Unit}}</ref> to encourage innovation to improve public services. It allowed "risk" to describe either "positive opportunity or negative threat of actions and events". * "Potential returns from an event ['a thing that happens or takes place'], where the returns are any changes, effects, consequences, and so on, of the event" ::This definition from Newsome (2014) expands the neutrality of 'risk' akin to the UK Cabinet Office (2002) and Knight (1921).<ref>{{cite book |last=Newsome |first=Bruce |title=A Practical Introduction to Security and Risk Management |date=2013 |publisher=SAGE Publications |isbn=978-1-4833-1340-5}}</ref> * "Human interaction with uncertainty" ::This definition comes from Cline (2015) in the context of adventure education.<ref>{{cite journal |last1=Cline |first1=Preston B. |date=3 March 2015 |title=The Merging of Risk Analysis and Adventure Education |url=https://www.outdoored.com/sites/default/files/documents/files/wrmc_proceedings_05_adventure_cline.pdf |journal=Wilderness Risk Management |volume=5 |issue=1 |pages=43–45 |access-date=12 December 2016 |archive-date=29 May 2020 |archive-url=https://web.archive.org/web/20200529021547/https://www.outdoored.com/sites/default/files/documents/files/wrmc_proceedings_05_adventure_cline.pdf |url-status=dead }}</ref>
===Versus uncertainty=== In his seminal 1921 work ''Risk, Uncertainty, and Profit'', Frank Knight established the distinction between risk and uncertainty.
{{blockquote|... Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been properly separated. The term "risk," as loosely used in everyday speech and in economic discussion, really covers two things which, functionally at least, in their causal relations to the phenomena of economic organization, are categorically different. ... The essential fact is that "risk" means in some cases a quantity susceptible of measurement, while at other times it is something distinctly not of this character; and there are far-reaching and crucial differences in the bearings of the phenomenon depending on which of the two is really present and operating. ... It will appear that a measurable uncertainty, or "risk" proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all. We ... accordingly restrict the term "uncertainty" to cases of the non-quantitive type.<ref>Frank Hyneman Knight "Risk, uncertainty and profit" pg. 19, Hart, Schaffner, and Marx Prize Essays, no. 31. Boston and New York: Houghton Mifflin. 1921.</ref>}}
Thus, Knightian uncertainty is immeasurable, not possible to calculate, while in the Knightian sense risk is measurable.
=== By field === {| class="wikitable" |+Definitions of risk !Field !Definition !Sources !Related concepts |- |Economics |Uncertainty about loss |Willett's "Economic Theory of Risk and Insurance" (1901).<ref>{{cite book |last1=Willett |first1=Allan |url=https://archive.org/details/economictheoryr00willgoog |title=Economic Theory of Risk and Insurance |date=1901 |publisher=Columbia University Press |page=[https://archive.org/details/economictheoryr00willgoog/page/n10 6]}}</ref> | |- | rowspan="2" |Insurance |Measurable uncertainty |Knight's "Risk, Uncertainty and Profit" (1921).<ref>{{cite book |last1=Knight |first1=Frank |url=https://archive.org/details/riskuncertaintyp00knig |title=Risk, Uncertainty and Profit |date=1921 |publisher=Boston, New York, Houghton Mifflin Company}}</ref><ref>{{cite journal |last1=Masci |first1=Pietro |date=Spring 2011 |title=The History of Insurance: Risk, Uncertainty and Entrepreneurship |url=https://www.bpastudies.org/bpastudies/article/view/153/296 |journal=Journal of the Washington Institute of China Studies |volume=5 |issue=3 |pages=25–68 |access-date=13 April 2020}}</ref><ref>{{cite journal |last1=Carson |first1=James M. |last2=Elyasiani |first2=Elyas |last3=Mansur |first3=Iqbal |year=2008 |title=Market Risk, Interest Rate Risk, and Interdependencies in Insurer Stock Returns: A System-GARCH Model |journal=The Journal of Risk and Insurance |volume=75 |issue=4 |pages=873–891 |citeseerx=10.1.1.568.4087 |doi=10.1111/j.1539-6975.2008.00289.x |s2cid=154871203}}</ref> | rowspan="2" |Knightian uncertainty, mortality risk, longevity risk, interest rate risk |- |Possibility of an event occurring which causes injury or loss |Lloyd's.<ref>{{cite web |title=Glossary and acronyms |url=https://www.lloyds.com/help-and-glossary/glossary-and-acronyms?Term=risk |access-date=29 April 2020 |publisher=Lloyd's}}</ref> |- | rowspan="5" |Finance | rowspan="5" |Volatility of return | rowspan="5" |Markovitz's "Portfolio Selection" (1952).<ref>{{cite journal |last1=Markovitz |first1=H. |date=March 1952 |title=Portfolio Selection |journal=The Journal of Finance |volume=7 |issue=1 |pages=77–91}}</ref><ref name="Hubbard">{{cite book |last=Hubbard |first=Douglas |title=The Failure of Risk Management: Why It's Broken and How to Fix It |date=4 Mar 2020 |publisher=John Wiley & Sons |isbn=978-1-119-52203-4}}</ref> |Financial risk management, Risk aversion |- |Components: Downside risk, Upside risk, Inherent risk, Benefit risk |- |Business risks: Enterprise risk management, Audit risk, Process risk, Legal risk, Reputational risk, Peren–Clement index |- |Investments: Modern portfolio theory, Value at risk, Hedge |- |Types of financial risks: Market risk, Credit risk, Liquidity risk, Operational risk |- |Decision theory |Statistically expected loss |Wald (1939).<ref>{{cite journal |last1=Wald |first1=A |date=1939 |title=Contributions to the Theory of Statistical Estimation and Testing Hypotheses |journal=Annals of Mathematical Statistics |volume=10 |issue=4 |pages=299–326 |doi=10.1214/aoms/1177732144 |bibcode=1939AnnMS..10..299W |doi-access=free}}</ref> Used in planning of Delta Works in 1953.<ref>Wired Magazine, [https://www.wired.com/science/planetearth/magazine/17-01/ff_dutch_delta?currentPage=3 Before the levees break], page 3.</ref> Adopted by the US Nuclear Regulatory Commission in 1975.<ref>{{cite book |last1=Rasmussen |title=An Assessment of Accident Risks in U.S. Commercial Nuclear Power Plants |date=1975 |publisher=US Nuclear Regulatory Commission |ref=WASH-1400}}</ref> Remains widely used.<ref name="Stanford" /> | |- |Bayesian analysis<ref name="Aven">{{cite book |last1=Aven |first1=Terje |title=Quantitative Risk Assessment – The Scientific Platform |date=2011 |publisher=Cambridge University Press}}</ref> |Scenarios, probabilities and consequences: Consequences and associated uncertainty; likelihood and severity of events |Kaplan & Garrick (1981).<ref name="Kaplan&Garrick">{{cite journal |last1=Kaplan |first1=S. |last2=Garrick |first2=B.J. |date=1981 |title=On the Quantitative Definition of Risk |journal=Risk Analysis |volume=1 |issue=1 |pages=11–27 |doi=10.1111/j.1539-6924.1981.tb01350.x |bibcode=1981RiskA...1...11K }}</ref> Found in ISO Guide 73 Note 4.<ref name="ISO 31073" /> | |- |Occupational health and safety |Combination of the likelihood and consequence(s) of a specified hazardous event occurring |Occupational Health and Safety Assessment Series (OHSAS) standard OHSAS 18001, 1999. |Occupational hazard, High reliability organisation, Probabilistic risk assessment, WASH-1400<ref>Ranking of Risks for Existing and New Building Works, Sustainability 2019, 11(10), 2863, https://doi.org/10.3390/su11102863</ref> |- |Cybersecurity |Asset, threat and vulnerability |Threat Analysis Group (2010).<ref>{{cite web |date=3 May 2010 |title=Threat, vulnerability, risk – commonly mixed up terms |url=https://www.threatanalysis.com/2010/05/03/threat-vulnerability-risk-commonly-mixed-up-terms/ |access-date=31 October 2020 |publisher=Threat Analysis Group}}</ref> |Information security, IT risk management, IT risk |- |{{Anchor|Environment}}Environment |Chance of harmful effects to human health or to ecological systems |United States Environmental Protection Agency.<ref>{{cite web |date=3 December 2013 |title=About risk assessment |url=https://www.epa.gov/risk/about-risk-assessment#whatisrisk |publisher=US Environmental Protection Agency}}</ref> |Environmental hazards, Environmental issues,<ref name="Environmental Risk Analysis: Problems and Perspectives in Different Countries">{{cite journal |last=Gurjar |first=Bhola Ram |author2=Mohan, Manju |year=2002 |title=Environmental Risk Analysis: Problems and Perspectives in Different Countries |url=http://heinonline.org/HOL/Page?handle=hein.journals/risk13&id=5&collection=journals&index=journals/risk |journal=Risk: Health, Safety & Environment |volume=13 |page=3 |access-date=23 March 2013}}</ref> Environmental protection |- |Health |Possibility that something will cause harm |Centres for Disease Control and Prevention.<ref>{{Cite web| title=Environmental Health Resoures Self Learning Module - Risk Assessment | url=https://www.atsdr.cdc.gov/land-reuse-health-program/media/pdfs/risk_assessment-508.pdf | archive-url=https://web.archive.org/web/20241122171915/https://www.atsdr.cdc.gov/land-reuse-health-program/media/pdfs/risk_assessment-508.pdf | archive-date=2024-11-22}}</ref> |Epidemiology, Risk factors, Health risk assessment, Relative risk, Mortality rate, Loss of life expectancy |- |Project management |An uncertain event or condition that, if it occurs, has a positive or negative effect on a project's objectives |Project Management Institute.<ref>{{cite book |title=A guide to the project management body of knowledge (PMBOK guide). |date=2013 |publisher=Project Management Institute |edition=5th |page=309}}</ref><ref>Boroomand, A. and Smaldino, P.E., 2021. Hard Work, Risk-Taking, and Diversity in a Model of Collective Problem Solving. Journal of Artificial Societies and Social Simulation, 24(4).</ref> |Project risk management |- |Security |Any event that could result in the compromise of organizational assets i.e. the unauthorized use, loss, damage, disclosure or modification of organizational assets for the profit, personal interest or political interests of individuals, groups or other entities |<ref>Julian Talbot and Miles Jakeman ''Security Risk Management Body of Knowledge'', John Wiley & Sons, 2009.</ref> |Security management |}
=== Mathematical ===
==== Triplets ==== Risk is often considered to be a set of triplets<ref name="Kaplan&Garrick" /><ref name="Hubbard" />
:<math> \text{R} = (s_i, p_i, x_i ) </math> for i = 1,2,....,N
where: :<math> s_i </math> is a scenario describing a possible event :<math> p_i </math> is the probability of the scenario :<math> x_i </math> is the consequence of the scenario :<math> N </math> is the number of scenarios chosen to describe the risk
Risks expressed in this way can be shown in a risk register or a risk matrix. They may be quantitative or qualitative, and can include positive as well as negative consequences.<ref name="ISO31010">{{cite web |date=July 2019 |title=IEC 31010:2019 Risk management — Risk assessment techniques |url=https://www.iso.org/standard/72140.html |access-date=29 October 2020 |publisher=ISO|archive-url=https://web.archive.org/web/20260318163450/https://www.iso.org/standard/72140.html|archive-date=18 March 2026}}</ref>
An updated version recommends the following general description of risk:<ref name="Aven" />
:<math> R = ({A, C, U, P, K} ) </math> where: :<math> A </math> is an event that might occur :<math> C </math> is the consequences of the event :<math> U </math> is an assessment of uncertainties :<math> P </math> is a knowledge-based probability of the event :<math> K </math> is the background knowledge that U and P are based on
==== Probability distributions ==== If all the consequences are expressed in the same units (or can be converted into a consistent loss function), the risk can be expressed as a probability density function describing the uncertainty about outcome:
:<math> R = p(x) </math>
This can also be expressed as a cumulative distribution function (CDF) (or S curve).<ref name="ISO31010" /> One way of highlighting the tail of this distribution is by showing the probability of exceeding given losses, known as a complementary cumulative distribution function, plotted on logarithmic scales. For example, frequency-number diagrams show the annual frequency of exceeding given numbers of fatalities.<ref name="ISO31010" /> Another way of summarizing the size of the distribution's tail is the loss with a certain probability of exceedance, that is, the value at risk.
==== Expected values ==== Risk is often measured as the expected value of the loss. This combines the probabilities and consequences into a single value. See also expected utility. The simplest case is a binary possibility of ''Accident'' or ''No accident''. The associated formula for calculating risk is then:
:<math> R = (\text{probability of the accident occurring}) \times (\text{expected loss in case of the accident})</math>
In a situation with several possible accident scenarios, total risk is the sum of the risks for each scenario, provided that the outcomes are comparable:
:<math> R = \sum_{i=1}^N p_i x_i</math>
In statistical decision theory, the risk function is defined as the expected value of a given loss function as a function of the decision rule used to make decisions in the face of uncertainty.
A disadvantage of defining risk as the product of impact and probability is that it presumes, unrealistically, that decision-makers are risk-neutral. A risk-neutral person's utility is proportional to the expected value of the payoff. For example, a risk-neutral person would consider 20% chance of winning $1 million exactly as desirable as getting a certain $200,000. However, most decision-makers are not actually risk-neutral and would not consider these equivalent choices.<ref name="Hubbard" /> Pascal's mugging is a philosophical thought experiment that demonstrates issues in assessing risk solely by the expected value of loss or return.
==== Outcome frequencies ==== Risks of discrete events such as accidents are often measured as outcome frequencies, or expected rates of specific loss events per unit time. When small, frequencies are numerically similar to probabilities, but have dimensions of {{Math|{{sfrac|1|t}}}} and can sum to more than 1. Typical outcomes expressed this way include:<ref>{{cite book |url=https://publishing.energyinst.org/topics/offshore-safety/guide-to-quantitative-risk-assessment-for-offshore-installations |title=A Guide to Quantitative Risk Assessment for Offshore Installations |date=1999 |publisher=Centre of Marine and Petroleum Technology |pages=136–145}}</ref>
*Individual risk - the frequency of a given level of harm to an individual.<ref name="IChemE">{{cite book |last1=Jones |first1=David |url=https://icheme.myshopify.com/products/nomenclature-for-hazard-and-risk-assessment-2nd-edition |title=Nomenclature for Hazard and Risk Assessment |date=1992 |publisher=Institution of Chemical Engineers |edition=2nd}}</ref> It often refers to the expected annual probability of death, and is then comparable to the mortality rate. *Group (or societal risk) – the relationship between the frequency and the number of people suffering harm.<ref name="IChemE" /> *Frequencies of property damage or total loss. *Frequencies of environmental damage such as oil spills.
== Financial risk == {{See also|Financial risk}} In finance, an elementary measure of risk for financial asset prices is with volatility, the degree of variation of a trading price over time, usually measured by the standard deviation of logarithmic returns.
=== Portfolio theory === Modern portfolio theory measures the riskiness of a portfolio using the variance (or standard deviation) of the portfolio. If we denote return by <math>R(w)</math> of a portfolio with weight vector <math>w = (w_1,\dots,w_n)'</math> then the risk, as measured by variance of the portfolio is given by
:<math> \text{Risk}=\mathrm{Var}(R(w)) = \sum_{i=1,j=1}^n w_j w_j\mathrm{Cov}(R_i,R_j) </math>
where <math> R_i </math> denotes the return of asset <math> i=1,\dots,n </math>. Modern portfolio theory tells us an optimal combination of weights creates an optimal portfolio - known as the tangency portfolio - that still has undiversifiable risk. The model implies this 'systematic' source of risk should be the only factor considered, as all other sources of risk can be diversified away. An extension of this is the Capital asset pricing model (CAPM), where this optimal portfolio becomes known as the market portfolio.
The beta coefficient measures the sensitivity of an individual asset to overall market changes, and is defined as the linear projection coefficient of asset <math> i=1,\dots,n </math> returns on the returns of a market portfolio,
<math>\beta_i = \frac{\mathrm{Cov}(R_i,R_{mkt})}{\mathrm{Var}(R_i)} </math>
In a CAPM world, <math> \beta_i </math> can be interpreted as the contribution of systemic risk to the risk of asset <math>i</math>.
=== Risk-neutral measure === In mathematical finance, a risk-neutral measure is a probability measure such that each share price is exactly equal to the discounted expectation of the share price under the measure. This is heavily used in the pricing of financial derivatives due to the fundamental theorem of asset pricing.
Let <math>S</math> be a d-dimensional market representing the price processes of the risky assets, <math>B</math> the risk-free bond and <math>(\Omega,\mathcal{F},P)</math>the underlying probability space. Then a measure <math>Q</math> is a risk-neutral measure if
# <math>Q\approx P</math>, i.e., <math>Q</math> is equivalent to <math>P</math>, # the processes <math>\left( \frac{S^i_t}{B_t} \right)_t</math> are (local) martingales w.r.t. <math>Q</math> <math>\forall \, i=1,\dots,d</math>.<ref>{{Cite book |last=Björk |first=Tomas |title=Arbitrage theory in Continuous Time |publisher=Oxford University Press |year=2004 |isbn=978-0-19-927126-9 |location=New York |pages=136f |language=en}}</ref>
=== Mandelbrot's mild and wild theory === Benoit Mandelbrot distinguished between "mild" and "wild" risk and argued that risk assessment and analysis must be fundamentally different for the two types of risk.<ref>{{Cite book |last=Mandelbrot, Benoit and Richard L. Hudson |title=The (mis)Behaviour of Markets: A Fractal View of Risk, Ruin and Reward |publisher=Profile Books |year=2008 |isbn=978-1-84668-262-9 |location=London}}</ref> Mild risk follows normal or near-normal probability distributions, is subject to regression to the mean and the law of large numbers, and is therefore relatively predictable. Wild risk follows fat-tailed distributions, e.g., Pareto or power-law distributions, is subject to regression to the tail (infinite mean or variance, rendering the law of large numbers invalid or ineffective), and is therefore difficult or impossible to predict. A common error in risk assessment and analysis is to underestimate the wildness of risk, assuming risk to be mild when in fact it is wild, which must be avoided if risk assessment and analysis are to be valid and reliable, according to Mandelbrot.
=== Estimation ===
* Proxy or analogue data from other contexts, presumed to be similar in some aspects of risk. * Theoretical models, such as Monte Carlo simulation and Quantitative risk assessment software. * Logical models, such as Bayesian networks, fault tree analysis and event tree analysis * Expert judgement, such as absolute probability judgement or the Delphi method.
==Management== Risk management is the set of actions that organisations take to avoid and mitigate downside risks,<ref name="PCCRARM">{{cite book |title=Risk Assessment and Risk Management in Regulatory Decision-Making |date=1997 |publisher=Presidential/Congressional Commission on Risk Assessment and Risk Management}}</ref><ref name="ISO 31073" /> taking into account factors such as the possibility of upside risk opportunities,<ref>{{cite book |title=AS/NZS 4360:1999 Risk Management |date=1999 |publisher=Standards Australia & Standards New Zealand}}</ref> innovation,<ref>{{cite book |title=Risk: Improving government's capability to handle risk and uncertainty |date=2002 |publisher=Cabinet Office}}</ref> the environment, safety,<ref>{{cite web |title=Risk management |url=https://www.aiche.org/ccps/resources/glossary?title=risk+management#views-exposed-form-glossary-page |access-date=29 October 2020 |website=Process Safety Glossary |publisher=Center for Chemical Process Safety}}</ref> scientific evidence, culture, politics, and law.<ref name="PCCRARM" /> Risk management operates at the strategic, operational, and individual level,<ref name="ISO31000" /> and may form part of an overarching governance, risk, and compliance strategy. It comprises the assessment of risk as regards an organisation's objectives and strategies, as well as risk mitigation options, such as risk transformation, risk transfer, risk avoidance, risk reduction, and risk retention.<ref>{{Cite journal |last=Baldzhy |first=Maryna |date=2023-12-25 |title=Risk Management Strategies in the Global Business Environment: Analysis of Complex Dependencies and Effectiveness of Measures |url=http://ndpublisher.in/admin/issues/EAv68n5t.pdf |journal=Economic Affairs |volume=68 |issue=4 |doi=10.46852/0424-2513.4.2023.20}}</ref>
=== Assessment === Risk assessment is a systematic approach to recognising and characterising risks, and evaluating their significance, in order to support decisions about how to manage them. ISO 31000 defines it in terms of its components as "the overall process of risk identification, risk analysis and risk evaluation":<ref name="ISO31000" />
* Risk identification is "the process of finding, recognizing and recording risks". It "involves the identification of risk sources, events, their causes and their potential consequences."<ref name="ISO 31073" /> ISO 31000 describes it as the first step in a risk assessment process, preceding risk analysis and risk evaluation.<ref name="ISO31000" /> In safety contexts, where risk sources are known as hazards, this step is known as "hazard identification".<ref>{{cite book |last1=Lyon |first1=Bruce |title=Fundamental Techniques |date=2016 |publisher=John Wiley & Sons |location=In Popov G, Lyon BK, Hollcraft B (eds.). Risk Assessment: A Practical Guide to Assessing Operational Risks}}</ref> * The ISO defines risk analysis as "the process to comprehend the nature of risk and to determine the level of risk".<ref name="ISO 31073" /> In the ISO 31000 risk assessment process, risk analysis follows risk identification and precedes risk evaluation.<ref name="ISO31010" /> Risk analysis often uses data on the probabilities and consequences of previous events. * Risk evaluation involves comparing estimated levels of risk against risk criteria to determine the significance of the risk and make decisions about risk treatment actions.<ref name="ISO31010" /> In most activities, risks can be reduced by adding further controls or other treatment options, but typically this increases cost or inconvenience. It is rarely possible to eliminate risks altogether without discontinuing the activity. Sometimes it is desirable to increase risks to secure valued benefits. Risk criteria are intended to guide decisions on these issues.<ref>{{cite book |title=Harmonised Risk Acceptance Criteria for Transport of Dangerous Goods |date=2014 |publisher=European Commission |url=https://ec.europa.eu/transport/sites/transport/files/modes/rail/studies/doc/2014-03-25-dangerous-goods.pdf}}</ref>
For example, the tolerability of risk framework, developed by the UK Health and Safety Executive, divides risks into three bands:<ref>{{cite book |title=The Tolerability of Risk from Nuclear Power Stations |date=1992 |publisher=Health and Safety Executive |edition=2nd |url=http://www.onr.org.uk/documents/tolerability.pdf}}</ref>
*Unacceptable risks – only permitted in exceptional circumstances. *Tolerable risks – to be kept as low as reasonably practicable (ALARP), taking into account the costs and benefits of further risk reduction. *Broadly acceptable risks – not normally requiring further reduction.
==== Attitude, appetite and tolerance ==== The terms risk appetite, attitude, and tolerance are often used similarly to describe an organisation's or individual's attitude towards risk-taking. One's attitude may be described as risk-averse, risk-neutral, or risk-seeking.<ref>[http://www.chicagofed.org/digital_assets/publications/working_papers/2009/wp2009_23.pdf Federal Reserve Bank of Chicago, ''Health and the Savings of Insured versus Uninsured, Working-Age Households in the U.S.'', November 2009]</ref>
=== Mitigation ===
* Risk transformation describes the process of not only mitigating risks but also employing risk factors into advantages.<ref>{{Cite web |last=deloitteeditor |title=Risk Transformation: Understanding the Role of Data, Analytics and Technology |url=https://deloitte.wsj.com/riskandcompliance/2017/04/11/risk-transformation-understanding-the-role-of-data-analytics-and-technology/ |access-date=2020-11-05 |website=deloitte.wsj.com |date=11 April 2017 |language=en-US}}</ref> * Risk transfer is the shifting of risks from one party to another, typically an insurer.<ref>{{Cite web |date=2009-01-23 |title=Definition: Risk transfer {{!}} UNDRR |url=https://www.undrr.org/terminology/risk-transfer |access-date=2025-09-19 |website=www.undrr.org |language=en}}</ref>
==Psychology of risk== ===Risk perception=== Risk perception is the subjective judgement that people make about the characteristics and severity of a risk. At its most basic, the perception of risk is an intuitive form of risk analysis.<ref>{{cite book |last1=Breakwell |first1=Glynis |title=The Psychology of Risk |date=2014 |publisher=Cambridge University Press |edition=2nd |page=35}}</ref>
Adults have an intuitive understanding of risk, which may not be exclusive to humans.<ref>{{cite journal |last1=Dugatkin |first1=Lee |title=The Evolution of Risk-Taking |journal=Cerebrum |date=2013 |volume=2013 |page=1 |pmid=23516663 |pmc=3600861 }}</ref> Many ancient societies believed in divinely determined fates, and attempts to influence the gods can be seen as early forms of risk management. Early uses of the word 'risk' coincided with an erosion of belief in divinely ordained fate.<ref>{{cite book |last1=Breakwell |first1=Glynis |title=The Psychology of Risk |date=2014 |publisher=Cambridge University Press |page=2 |edition=2nd}}</ref> Notwithstanding, intuitive perceptions of risk are often inaccurate owing to reliance on psychological heuristics, which are subject to systematic cognitive biases.<ref>{{cite journal |last1=Tversky |first1=Amos |last2=Kahneman |first2=Daniel |title=Judgment under Uncertainty: Heuristics and Biases |journal=Science |date=1974 |volume=185 |issue=4157 |pages=1124–1131|doi=10.1126/science.185.4157.1124 |pmid=17835457 |bibcode=1974Sci...185.1124T |s2cid=6196452 }}</ref> In particular, the accuracy of risk perception can be adversely affected by the affect heuristic, which relies on emotion to make decisions.<ref>{{cite book |last1=Breakwell |first1=Glynis |title=The Psychology of Risk |date=2014 |publisher=Cambridge University Press |edition=2nd |page=142}}</ref><ref>{{cite book |last1=Breakwell |first1=Glynis |title=The Psychology of Risk |date=2014 |publisher=Cambridge University Press |edition=2nd |page=138}}</ref>
The availability heuristic is the process of judging the probability of an event by the ease with which instances come to mind. In general, rare but dramatic causes of death are over-estimated while common unspectacular causes are under-estimated;<ref>{{cite book |last1=Slovic |first1=Paul |title=The Perception of Risk |date=2000 |publisher=Earthscan |location=London |page=107}}</ref> an "availability cascade" is a self-reinforcing cycle in which public concern about relatively minor events is amplified by media coverage until the issue becomes politically important.<ref>{{cite journal |last1=Kuran |first1=Timur |last2=Sunstein |first2=Cass |title=Availability Cascades and Risk Regulation |journal=Stanford Law Review |date=2007 |volume=51 |issue=4 |pages=683–768|doi=10.2307/1229439 |jstor=1229439 |s2cid=3941373 |url=https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1036&context=public_law_and_legal_theory }}</ref> Despite the difficulty of thinking statistically, people are typically subject to the overconfidence effect in their judgements, tending to overestimate their understanding of the world and underestimate the role of chance,<ref>{{cite book |last1=Kahneman |first1=Daniel |title=Thinking, Fast and Slow |date=2011 |publisher=Penguin Books |location=London |pages=10–14}}</ref> with even experts subject to this effect.<ref>{{cite journal |last1=Slovic |first1=Paul |last2=Fischhoff |first2=Baruch |last3=Lichtenstein |first3=Sarah |date=1979 |title=Rating the Risks |journal=Environment |volume=2 |issue=3 |pages=14–20 |doi=10.1080/00139157.1979.9933091 |bibcode=1979ESPSD..21c..14S }}</ref> Other biases that affect the perception of risk include ambiguity aversion.
Paul Slovic's "psychometric paradigm" assumes that risk is subjectively defined by individuals, influenced by factors such as lack of control, catastrophic potential, and severity of consequences, such that risk perception can be psychometrically measured by surveys.<ref>Gigerenzer G (2004) Dread risk, 11 September, and fatal traffic accidents. Psych Sci 15:286−287.</ref><ref>{{cite book |last1=Slovic |first1=Paul |title=The Perception of Risk |date=2000 |publisher=Earthscan |location=London |page=xxiii}}</ref><ref name="Slovic P 1987">{{cite journal |last1=Slovic |first1=P |year=1987 |title=Perception of risk |journal=Science |volume=236 |issue=4799 |pages=280–285 |bibcode=1987Sci...236..280S |doi=10.1126/science.3563507 |pmid=3563507}}</ref> Slovic argues that intuitive emotional reactions are the predominant method by which humans evaluate risk, and that a purely statistical approach to disasters lacks emotion and thus fails to convey the true meaning of disasters and fails to motivate proper action to prevent them.<ref>{{cite book |last1=Slovic |first1=Paul |title=The Feeling of Risk |date=2010 |publisher=Routledge}}</ref> This theory has received support from retrospective studies and evolutionary psychology.<ref>{{cite journal |last1=Öhman |first1=A |last2=Mineka |first2=S |year=2001 |title=Fears, phobias, and preparedness: Toward an evolved module of fear and fear learning |journal=Psychol Rev |volume=108 |issue=3 |pages=483–522 |doi=10.1037/0033-295x.108.3.483 |pmid=11488376}}</ref><ref>{{cite journal |last1=Gaissmaier |first1=W. |last2=Gigerenzer |first2=G. |year=2012 |title=9/11, Act II: A fine-grained analysis of regional variations in traffic fatalities in the aftermath of the terrorist attacks |url=http://nbn-resolving.de/urn:nbn:de:bsz:352-279310 |journal=Psychological Science |volume=23 |issue=12 |pages=1449–1454 |doi=10.1177/0956797612447804 |hdl=11858/00-001M-0000-0024-EF79-3 |pmid=23160203 |s2cid=3164450 |hdl-access=free}}</ref><ref name="Lichtenstein S 1978">{{cite journal |last1=Lichtenstein |first1=S |last2=Slovic |first2=P |last3=Fischhoff |first3=B |last4=Layman |first4=M |last5=Combs |first5=B |year=1978 |title=Judged frequency of lethal events |journal=Journal of Experimental Psychology: Human Learning and Memory |volume=4 |issue=6 |pages=551–578 |doi=10.1037/0278-7393.4.6.551 |hdl=1794/22549 |hdl-access=free}}</ref><ref>{{cite journal |last1=Bodemer |first1=N. |last2=Ruggeri |first2=A. |last3=Galesic |first3=M. |year=2013 |title=When dread risks are more dreadful than continuous risks: Comparing cumulative population losses over time |journal=PLOS ONE |volume=8 |issue=6 |article-number=e66544 |bibcode=2013PLoSO...866544B |doi=10.1371/journal.pone.0066544 |pmc=3694073 |pmid=23840503 |doi-access=free}}</ref><ref>{{cite journal |last1=Hill |first1=KR |last2=Walker |first2=RS |last3=Bozicevic |first3=M |last4=Eder |first4=J |last5=Headland |first5=T |display-authors=etal |year=2011 |title=Co-residence patterns in hunter-gatherer societies show unique human social structure |journal=Science |volume=331 |issue=6022 |pages=1286–1289 |bibcode=2011Sci...331.1286H |doi=10.1126/science.1199071 |pmid=21393537 |s2cid=93958}}</ref><ref>{{cite journal |last1=Wang |first1=XT |year=1996 |title=Evolutionary hypotheses of risk-sensitive choice: Age differences and perspective change |journal=Ethol Sociobiol |volume=17 |pages=1–15 |citeseerx=10.1.1.201.816 |doi=10.1016/0162-3095(95)00103-4}}</ref> Hazards with high perceived risk are therefore, in general, seen as less acceptable and more in need of reduction.<ref>{{cite book |last1=Slovic |first1=Paul |title=The Perception of Risk |date=2000 |publisher=Earthscan |location=London |pages=137–146}}</ref>
Cultural theory of risk views risk perception as a collective phenomenon by which different cultures select some risks for attention and ignore others, with the aim of maintaining their particular way of life.<ref>{{cite book |last1=Douglas |first1=Mary |last2=Wildavsky |first2=Aaron |title=Risk and Culture: An Essay on the Selection of Technological and Environmental Dangers |date=1982 |publisher=University of California Press |location=Berkeley}}</ref> Hence risk perception varies according to the preoccupations of the culture. The theory outlines two categories, the degree of binding to social groups, the degree of social regulation.<ref>{{cite web |title=A short summary of grid-group cultural theory |url=https://fourcultures.com/a-short-summary-of-grid-group-cultural-theory/ |website=Four Cultures |date=10 March 2010 |access-date=21 October 2022}}</ref> Cultural theory can be used to explain why it can be difficult for people with different world-views to agree about whether a hazard is acceptable, and why risk assessments may be more persuasive for some people than others. However, there is little quantitative evidence that shows cultural biases are strongly predictive of risk perception.<ref>{{cite book |last1=Breakwell |first1=Glynis |title=The Psychology of Risk |date=2014 |publisher=Cambridge University Press |page=82 |edition=2nd}}</ref>
=== Decision theory === {{Main|Decision theory|Prospect theory}}
In decision theory, regret (and anticipation of regret) can play a significant part in decision-making, distinct from risk aversion.<ref>Virine, L., & Trumper, M. ProjectThink. Gower. 2013</ref><ref>Virine, L., & Trumper, M. Project Risk Analysis Made Ridiculously Simple. World Scientific Publishing. 2017</ref> Framing is also a fundamental problem with all forms of risk assessment.<ref>Amos Tversky / Daniel Kahneman, 1981. "The Framing of Decisions and the Psychology of Choice."{{Verify source|date=October 2008}}</ref> In particular, because of bounded rationality, the risk of extreme events is discounted because the probability is too low to evaluate intuitively. As an example, one of the leading causes of death is road accidents caused by drunk driving – partly because any given driver frames the problem by largely or totally ignoring the risk of a serious or fatal accident. The right prefrontal cortex has been shown to take a more global perspective,<ref>{{cite journal | last1 = Schatz | first1 = J. | last2 = Craft | first2 = S. | last3 = Koby | first3 = M. | last4 = DeBaun | first4 = M. R. | year = 2004 | title = Asymmetries in visual-spatial processing following childhood stroke | journal = Neuropsychology | volume = 18 | issue = 2 | pages = 340–352 | doi=10.1037/0894-4105.18.2.340| pmid = 15099156 }}</ref> while greater left prefrontal activity relates to local or focal processing.<ref>{{cite journal | last1 = Volberg | first1 = G. | last2 = Hubner | first2 = R. | year = 2004 | title = On the role of response conflicts and stimulus position for hemispheric differences in global/local processing: An ERP study | journal = Neuropsychologia | volume = 42 | issue = 13 | pages = 1805–1813 | doi=10.1016/j.neuropsychologia.2004.04.017| pmid = 15351629 | s2cid = 9810481 | url = https://kops.uni-konstanz.de/bitstreams/d5718ec3-ef8d-496b-80db-83c4945a119c/download | type = Submitted manuscript }}</ref><ref>Drake, R. A. (2004). Selective potentiation of proximal processes: Neurobiological mechanisms for spread of activation. Medical Science Monitor, 10, 231–234.</ref><ref>{{cite journal | last1 = McElroy | first1 = T. | last2 = Seta | first2 = J. J. | year = 2004 | title = On the other hand, am I rational? Hemisphere activation and the framing effect | journal = Brain and Cognition | volume = 55 | issue = 3 | pages = 572–580 | doi=10.1016/j.bandc.2004.04.002| pmid = 15223204 | s2cid = 9949183 | url = http://libres.uncg.edu/ir/asu/f/McElroy_Todd_2004_On_the_Other_Hand.pdf }}</ref> Reference class forecasting is a forecasting method by which biases associated with risks can be mitigated.
===Risk taking=== Psychologists have run randomised experiments with a treatment and control group to ascertain the effect of different psychological factors that may be associated with risk taking,<ref>{{Cite journal |last=Cerf |first=Moran |date=October 4, 2022 |title=Risk Assessment Under Perceptual Ambiguity and its impact on category learning |url=https://psyarxiv.com/uyn4q/ |journal=PsyArXiv |doi=10.31234/osf.io/uyn4q |s2cid=221756622}}</ref> finding that positive and negative feedback about past risk taking can affect future risk taking. For example, one experiment showed that belief in competence correlated with risk-taking behavior.<ref> {{cite journal |last1=Krueger, Jr. |first1=Norris |last2=Dickson |first2=Peter R. |date=May 1994 |title=How Believing in Ourselves Increases Risk Taking: Perceived Self-Efficacy and Opportunity Recognition |url=https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-5915.1994.tb00810.x |journal=Decision Sciences |volume=25 |issue=3 |pages=385–400 |doi=10.1111/j.1540-5915.1994.tb00810.x |access-date=2023-05-18|url-access=subscription }}</ref> Risk compensation is a theory that suggests that people typically adjust their behavior in response to the perceived level of risk, becoming more careful where they sense greater risk and less careful if they feel more protected.<ref name="CJBS">{{cite journal |last1=Masson |first1=Maxime |last2=Lamoureux |first2=Julie |last3=de Guise |first3=Elaine |date=October 2019 |title=Self-reported risk-taking and sensation-seeking behavior predict helmet wear amongst Canadian ski and snowboard instructors. |journal=Canadian Journal of Behavioural Science |volume=52 |issue=2 |pages=121–130 |doi=10.1037/cbs0000153 |s2cid=210359660}}</ref> People also show risk aversion, such that they reject fair risky offers because of the perception of loss.<ref>{{cite journal |last1=Rabin |first1=Matthew |title=Risk Aversion and Expected-Utility Theory: A Calibration Theorem |journal=Econometrica |date=2000 |volume=68 |issue=5 |pages=1281–1292 |doi=10.1111/1468-0262.00158 |jstor=2999450 }}</ref><ref>{{cite journal |last1=Holt |first1=C. A. |last2=Laury |first2=S. K. |title=Risk aversion and incentive effects |journal=American Economic Review |volume=92 |issue=5 |year=2002 |pages=1644–1655 |doi=10.1257/000282802762024700}}</ref><ref>{{cite journal |last1=Rabin |first1=Matthew |last2=Thaler |first2=Richard H |title=Anomalies: Risk Aversion |journal=Journal of Economic Perspectives |date=1 February 2001 |volume=15 |issue=1 |pages=219–232 |doi=10.1257/jep.15.1.219 |doi-access=free }}</ref> Further, intuitive responses have been found to be less risk-averse than subsequent reflective response.<ref>{{cite journal |last1=Voudouri |first1=A. |last2=Białek |first2=M. |last3=De Neys |first3=W. |title=Fast & slow decisions under risk: Intuition rather than deliberation drives advantageous choices |journal=Cognition |volume=250 |year=2024 |article-number=105837 |doi=10.1016/j.cognition.2024.105837 |pmid=38878520 |url=https://hal.science/hal-04861729 }}</ref>
==== Sex differences ==== {{excerpt|Sex differences in humans|Financial risk-taking}}
==Philosophy of risk== Peter L. Bernstein (2012) showed that people used risk estimates before statistics and probability calculations were developed. Instead of relying on numbers, people used narratives and letters.<ref>{{Cite book |last=Bernstein |first=Peter L. |title=Against the Gods: The Remarkable Story of Risk |date=2012 |publisher=Wiley |isbn=978-0-471-29563-1 |location=Hoboken}}</ref> Captains and merchants shared voyage stories at coffeehouses, comparing notes about hazards on new routes and seasonal patterns. Through a web of correspondents, letters became increasingly important as people could update their beliefs about weather, wars, or piracy over long distances. These qualitative data helped investors and underwriters judge how dicey a proposed voyage felt.
This kind of evidence has led philosophers to think there is more to (objective) risk than the likelihood of an undesirable outcome. Ebert et al. (2020) suggest distinguishing risk monists from risk pluralists:<ref name=":0">{{Cite journal |last1=Ebert |first1=Philip A. |last2=Smith |first2=Martin |last3=Durbach |first3=Ian |date=September 2020 |title=Varieties of Risk |url=https://onlinelibrary.wiley.com/doi/10.1111/phpr.12598 |journal=Philosophy and Phenomenological Research |language=en |volume=101 |issue=2 |pages=432–455 |doi=10.1111/phpr.12598 |issn=0031-8205}}</ref> risk monists argue that there is just one correct way to understand risk. Tversky and Kahneman can be considered monists in this sense; probability judgments that diverged from the probability calculus were deemed incorrect or biased.<ref>{{Cite book |last=Kahneman |first=Daniel |title=Thinking, fast and slow |date=2013 |publisher=Farrar, Straus and Giroux |isbn=978-0-374-53355-7 |edition=1st pbk. |location=New York}}</ref> By contrast, pluralists claim that there are different, valid notions of risk. On this view, people who lived before statistics were developed may have been doing something legitimate when they estimated risks—even if those estimates conflict with a statistical notion. Without statistics, what else could they have done?
According to the modal account of risk, a situation is risky when nearby possible worlds—differing only slightly from the actual one—contain serious harm.<ref>{{Cite journal |last=Pritchard |first=Duncan |date=July 2015 |title=Risk |url=https://onlinelibrary.wiley.com/doi/10.1111/meta.12142 |journal=Metaphilosophy |language=en |volume=46 |issue=3 |pages=436–461 |doi=10.1111/meta.12142 |issn=0026-1068}}</ref> Risk tracks the closeness of such bad outcomes rather than their probability; hence a low-chance disaster may still count as high risk if only a small change would have led to it. On the normic account of risk, a situation is risky when the bad outcome would be normal or unsurprising.<ref name=":0" /> Risk is assessed through system functions and norms rather than bare probability. A harm counts as high risk when it would occur in the most normal continuations of the present setup; the less departure from normality needed for the harm, the greater the risk. Especially in domains where we lack predictive power, such approaches allow us to consider risk without relying on unknown probabilities, as illustrated by the normic account of suicide risk.<ref>{{Cite journal |last=Baston |first=René |date=2024-07-10 |title=Beyond prediction: a new paradigm for understanding suicide risk |url=https://link.springer.com/10.1007/s11229-024-04689-7 |journal=Synthese |language=en |volume=204 |issue=1 |article-number=35 |doi=10.1007/s11229-024-04689-7 |issn=1573-0964}}</ref>
==Society and culture== ===Risk and autonomy=== The experience of many people who rely on human services for support is that 'risk' is often used as a reason to prevent them from gaining further independence or fully accessing the community, and that these services are often unnecessarily risk averse.<ref>{{cite journal |last1=Neill |first1=M |title=A positive approach to risk requires person-centred thinking |journal=Tizard Learning Disability Review |date=October 2009 |volume=14 |issue=4 |pages=17–24 |doi=10.1108/13595474200900034 |url=https://www.researchgate.net/publication/237447666 |access-date=8 October 2022|citeseerx=10.1.1.604.3157 }}</ref> "People's autonomy used to be compromised by institution walls, now it's too often our risk management practices", according to John O'Brien.<ref>John O'Brien cited in Sanderson, H. Lewis, J. A Practical Guide to Delivering Personalisation; Person Centred Practice in Health and Social Care p211</ref> Michael Fischer and Ewan Ferlie (2013) find that contradictions between formal risk controls and the role of subjective factors in human services (such as the role of emotions and ideology) can undermine service values, so producing tensions and even intractable and 'heated' conflict.<ref>{{cite journal|last=Fischer|first=Michael Daniel|author2=Ferlie, Ewan|title=Resisting hybridisation between modes of clinical risk management: Contradiction, contest, and the production of intractable conflict|journal=Accounting, Organizations and Society|date=1 January 2013|volume=38|issue=1|pages=30–49|doi=10.1016/j.aos.2012.11.002|s2cid=44146410|url=http://eureka.sbs.ox.ac.uk/4368/1/Fischer_M_D__Ferlie_E_%28authors%27_post-print_version%29_Accounting_Organizations_and_Society.pdf|access-date=19 September 2019|archive-date=5 July 2019|archive-url=https://web.archive.org/web/20190705140612/http://eureka.sbs.ox.ac.uk/4368/1/Fischer_M_D__Ferlie_E_%28authors%27_post-print_version%29_Accounting_Organizations_and_Society.pdf}}</ref>
===Risk society=== {{Main|Risk society}} Anthony Giddens and Ulrich Beck argued that whilst humans have always been subjected to a level of risk – such as natural disasters – these have usually been perceived as produced by non-human forces. Modern societies, however, are exposed to risks such as pollution, that are the result of the modernization process itself. Giddens defines these two types of risks as external risks and manufactured risks.<ref>{{Cite book |last=Beck |first=Ulrich |title=Risk society: towards a new modernity |date=1992 |publisher=Sage Publications |isbn=978-0-8039-8345-8 |series=Theory, culture & society |location=London; Newbury Park, Calif}}</ref> The term ''Risk society'' was coined in the 1980s and its popularity during the 1990s was both as a consequence of its links to trends in thinking about wider modernity, and also to its links to popular discourse, in particular the growing environmental concerns during the period.
== See also == {{div col}} * Ambiguity aversion * Benefit shortfall * Civil defence * Countermeasure * Early case assessment * Event chain methodology * Fuel price risk management * Identity resolution * Information assurance * ISO/PAS 28000 * Life-critical system * Preventive maintenance * Reliability engineering * Peltzman effect {{div col end}}
==References== {{Reflist|30em}}
==Bibliography==
===Referred literature=== * James Franklin, 2001: ''The Science of Conjecture: Evidence and Probability Before Pascal'', Baltimore: Johns Hopkins University Press. * {{Cite journal | year= 2005 |author=John Handmer |author2=Paul James | title=Trust Us and Be Scared: The Changing Nature of Risk | url= https://www.academia.edu/3791859 | journal= Global Society | volume= 21 | issue= 1 | pages= 119–30}} * Niklas Luhmann, 1996: ''Modern Society Shocked by its Risks'' (= University of Hong Kong, Department of Sociology Occasional Papers 17), Hong Kong, available via [http://hub.hku.hk/handle/10722/42552 HKU Scholars HUB]
===Books=== * Historian David A. Moss' book ''When All Else Fails'' explains the US government's historical role as risk manager of last resort. * Bernstein P. L. ''Against the Gods'' {{ISBN|0-471-29563-9}}. Risk explained and its appreciation by man traced from earliest times through all the major figures of their ages in mathematical circles. * {{Cite book|last = Rescher|first = Nicholas|title = A Philosophical Introduction to the Theory of Risk Evaluation and Measurement|publisher = University Press of America|year = 1983}} * {{Cite book|last = Porteous|first = Bruce T.|author2=Pradip Tapadar |title = Economic Capital and Financial Risk Management for Financial Services Firms and Conglomerates|publisher = Palgrave Macmillan|date=December 2005|isbn = 978-1-4039-3608-0}} * {{Cite book|author = Tom Kendrick|year = 2003|title = Identifying and Managing Project Risk: Essential Tools for Failure-Proofing Your Project|publisher = AMACOM/American Management Association|isbn = 978-0-8144-0761-5|url-access = registration|url = https://archive.org/details/identifyingmanag00tomk}} * {{Cite book|author = Hillson D. |year = 2007|title = Practical Project Risk Management: The Atom Methodology|publisher = Management Concepts|isbn = 978-1-56726-202-5}} * {{Cite book|author = Kim Heldman|year = 2005|title = Project Manager's Spotlight on Risk Management|publisher = Jossey-Bass|isbn = 978-0-7821-4411-6}} * {{Cite book|author = Dirk Proske|year = 2008|title = Catalogue of risks – Natural, Technical, Social and Health Risks| journal=Eos, Transactions American Geophysical Union | volume=90 | issue=2 | page=18 |publisher = Springer|isbn = 978-3-540-79554-4|bibcode = 2009EOSTr..90...18E|doi = 10.1029/2009EO020009}} * Gardner D. ''Risk: The Science and Politics of Fear'', Random House Inc. (2008) {{ISBN|0-7710-3299-4}}. * Novak S.Y. Extreme value methods with applications to finance. London: CRC. (2011) {{ISBN|978-1-43983-574-6}}. * Hopkin P. Fundamentals of Risk Management. 2nd Edition. Kogan-Page (2012) {{ISBN|978-0-7494-6539-1}}
===Articles and papers=== * {{cite journal | last1 = Cevolini | first1 = A | year = 2015 | title = "Tempo e decisione. Perché Aristotele non-ha un concetto di rischio?" PDF | journal = Divus Thomas | volume = 118 | issue = 1| pages = 221–249 }} * {{cite journal | last1 = Clark | first1 = L. | author-link4 = Barbara Sahakian | last2 = Manes | first2 = F. | last3 = Antoun | first3 = N. | last4 = Sahakian | first4 = B. J. | last5 = Robbins | first5 = T. W. | year = 2003 | title = The contributions of lesion laterality and lesion volume to decision-making impairment following frontal lobe damage | journal = Neuropsychologia | volume = 41 | issue = 11 | pages = 1474–1483 | doi=10.1016/s0028-3932(03)00081-2| pmid = 12849765 | s2cid = 46447795 }} * {{cite journal | last1 = Cokely | first1 = E. T. | last2 = Galesic | first2 = M. | last3 = Schulz | first3 = E. | last4 = Ghazal | first4 = S. | last5 = Garcia-Retamero | first5 = R. | year = 2012 | title = Measuring risk literacy: The Berlin Numeracy Test | url = http://journal.sjdm.org/11/11808/jdm11808.pdf | journal = Judgment and Decision Making | volume = 7 | pages = 25–47 | doi = 10.1017/S1930297500001819 | s2cid = 11617465 }} * {{cite journal | last1 = Drake | first1 = R. A. | year = 1985 | title = Decision making and risk taking: Neurological manipulation with a proposed consistency mediation | journal = Contemporary Social Psychology | volume = 11 | pages = 149–152 }} * {{cite journal | last1 = Drake | first1 = R. A. | year = 1985 | title = Lateral asymmetry of risky recommendations | journal = Personality and Social Psychology Bulletin | volume = 11 | issue = 4 | pages = 409–417 | doi=10.1177/0146167285114007| s2cid = 143899523 }} * {{cite journal | last1 = Gregory | first1 = Kent J. | last2 = Bibbo | first2 = Giovanni | last3 = Pattison | first3 = John E. | year = 2005 | title = A Standard Approach to Measurement Uncertainties for Scientists and Engineers in Medicine | journal = Australasian Physical and Engineering Sciences in Medicine | volume = 28 | issue = 2| pages = 131–139 | doi=10.1007/bf03178705| pmid = 16060321 | s2cid = 13018991 }} * Hansson, Sven Ove. (2007). "Risk", ''The Stanford Encyclopedia of Philosophy'' (Summer 2007 Edition), Edward N. Zalta (ed.), forthcoming [http://plato.stanford.edu/archives/sum2007/entries/risk/]. * Holton, Glyn A. (2004). "Defining Risk", ''Financial Analysts Journal'', 60 (6), 19–25. A paper exploring the foundations of risk. (PDF file). * Knight, F. H. (1921) ''Risk, Uncertainty and Profit'', Chicago: Houghton Mifflin Company. (Cited at: [http://www.econlib.org/library/Knight/knRUP1.html], § I.I.26.). * Kruger, Daniel J., Wang, X.T., & Wilke, Andreas (2007) "Towards the development of an evolutionarily valid domain-specific risk-taking scale" ''Evolutionary Psychology'' (PDF file). * {{cite journal|doi=10.1016/j.futures.2008.09.017|title=Contradictory approaches? On realism and constructivism in the social sciences research on risk, technology and the environment|journal=Futures|volume=41|issue=3|pages=156–170|year=2009|last1=Metzner-Szigeth|first1=Andreas|url=https://mpra.ub.uni-muenchen.de/62775/1/MPRA_paper_62775.pdf}} * {{cite journal | last1 = Miller | first1 = L | year = 1985 | title = Cognitive risk taking after frontal or temporal lobectomy I. The synthesis of fragmented visual information | journal = Neuropsychologia | volume = 23 | issue = 3 | pages = 359–369 | doi=10.1016/0028-3932(85)90022-3 | pmid = 4022303| s2cid = 45154180 }} * {{cite journal | last1 = Miller | first1 = L. | last2 = Milner | first2 = B. | year = 1985 | title = Cognitive risk taking after frontal or temporal lobectomy II. The synthesis of phonemic and semantic information | journal = Neuropsychologia | volume = 23 | issue = 3 | pages = 371–379 | doi=10.1016/0028-3932(85)90023-5 | pmid = 4022304| s2cid = 31082509 }} * Neill, M. Allen, J. Woodhead, N. Reid, S. Irwin, L. Sanderson, H. 2008 "A Positive Approach to Risk Requires Person Centred Thinking" London, CSIP Personalisation Network, Department of Health. Available from: https://web.archive.org/web/20090218231745/http://networks.csip.org.uk/Personalisation/Topics/Browse/Risk/ [Accessed 21 July 2008]. * {{cite encyclopedia |last1=Wildavsky|first1=Aaron |author-link1=Aaron Wildavsky|last2=Wildavsky|first2=Adam|editor=David R. Henderson |encyclopedia=Concise Encyclopedia of Economics |title=Risk and Safety |url=http://www.econlib.org/library/Enc/RiskandSafety.html |year=2008 |edition= 2nd |publisher=Library of Economics and Liberty |location=Indianapolis |isbn=978-0-86597-665-8 |oclc=237794267}}
==External links== {{Sister project links|risk}} * [http://plato.stanford.edu/entries/risk/ Risk] – The entry of the ''Stanford Encyclopedia of Philosophy''
{{Insurance}} {{Environmental social science|state=collapsed}} {{Use dmy dates|date=July 2019}}
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{{DEFAULTSORT:Risk}} Category:Risk Category:Actuarial science Category:Environmental social science concepts