The third in a series of guest posts by Karel Simpson, Corporate Risk Manager at GardaWorld. Karel’s Blog is linked in this blog’s blogroll (right hand side of this page) You can read Karel’s earlier posts on ISO 31000 on this blog
Have you watched the home video clip shows? The likes of You’ve Been Framed? You can see no doubt clear as day people do silly things, take risks that you and I maybe would not; you of course maybe sat smiling thinking that you would or have. This led me to look into the topic of risk perception and tolerance to try and find what makes people tick.
I was fascinated at my findings and I plan to discuss risk perception and tolerance as I continue to study this in my own time as a personal quest and thirst for learning to share on this blog, hoping that it is of interest to someone. So I will look to post and discuss my ongoing research as I progress, with a snippit below.
So what are the definitions that I would use for Risk Perception and Tolerance? Rosa (2003) defines risk as a situation of “an event where something of human value (including humans themselves) is at stake and where the outcome is uncertain”. Sjoberg et al.(2004) gives the opinion that risk perception is the subjective assessment of the probability of a specified type of accident happening and how concerned we are with the consequences. I think these two fit well together but perhaps would lean more with Sjoberg.
The specific definition of risk tolerance is unlike perception in that the literature tends to not be too opinionated on the specifics and is much in agreement; although the literature is heavily focused on the financial markets as an industry the definition is applicable to all scenarios. Fox (2012) reflects on risk tolerance being the amount of uncertainty that is willing to be accepted in a particular risk category. This definition although not exactly word for word in the literature available is supported by the views of Lehmann et al. (2009).
So the big question is what can affect risk perception and risk tolerance? What do you think? We will look at this throughout the following posts and blogs over the next few weeks and months.