week3 Q2 .docx - Question 2 Critique the following...

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Question 2 Critique the following statement: “Being able to accurately assess the risk in a situation or resulting from a set of actions is, at a personal qualitative level, dependent upon an individual’s risk perception and risk tolerance.” In your answer you must also explain what factors may influence an individual’s risk perception and tolerances and how this may bias their estimation of risk. Be sure to define and explain optimism bias. Provide examples and discuss the relevance of optimism bias to risk management. Explain the Statement - Overview - Mitchell Bailes Hi Everyone, my name is Mitchell and this week my group and I will be discussing the 2nd question from this week's list concerning risk perception and risk tolerance. With use of research from the Campbell Institute, we will be defining and describing the factors that may influence someone's level of perception and tolerance towards a potential risk. We will also discuss how the cognitive bias someone may hold can have particular influence on their risk tolerance and perception. In particular ones optimism bias. We will then explain how all of these can affect the assessment and management of risk and why they need to be considered when establishing your risk management architecture and framework. Now onto Yangyu Hu to discuss what Risk Tolerance and Perception are... Define Risk Tolerance and Risk Perception - Yangyu HU Thanks Mitchell, Risk perceptions are beliefs about potential harm or the possibility of a loss. It is a subjective judgment that people make about the characteristics and severity of a risk. Flying is commonly considered greater risk than driving, although evidences show that flying is the most safest form of travel. There are occasional spectacular crashes on the newspapers and this causes people’s risk perception to increase. There a few reports at one place and time of the 50 thousand deaths on our highways. That’s because they’re diffused over time and space. Moreover, once a perception of risk sets in, it is very hard to change.
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