Risk Psychology

Extracted Attributes

• Core Focus

  Understanding and managing the psychological aspects of risk-taking and decision-making under uncertainty.

• Definition

  The study and understanding of the mental processes underlying human responses to risky situations, the recognition of a risk’s impact, and the development of frameworks for sound judgment in the face of risk.

• Applications

  High-stakes poker, business, economics, environment, finance, information technology, health, insurance, safety, security, privacy, risk management, behavioral risk management.

• Key Concepts

  Cognitive biases (e.g., zero risk bias, confirmation bias, ostrich effect, availability heuristic), risk perception, emotional influence on decisions, risk-averse strategies, decision-making under risk.

• Related Standard

  ISO 31000 (general guidelines and principles on managing risks faced by organizations).

• Prominent Researchers/Authors

  Hersh Shefrin (Santa Clara University), Paul Slovic (University of Oregon, Decision Research), Sandeep Mishra, M. L. Lalumière, E. U. Weber, S. Shafir, A.-R. Blais, J. A. Weller, A. Tikir, M. Bateson, A. Kacelnik, C. D. Batson, L. L. Shaw, K. C. Oleson.

Timeline

• C. D. Batson, L. L. Shaw, and K. C. Oleson published 'Differentiating affect, mood, and emotion: Toward functionally based conceptual distinctions', contributing to the understanding of emotional aspects in decision-making. (Source: web_search_results)

  1992

• M. Bateson and A. Kacelnik published 'Risk-sensitive foraging: Decision-making in variable environments', exploring risk-sensitive decision-making. (Source: web_search_results)

  1998

• E. U. Weber, S. Shafir, and A.-R. Blais published 'Predicting risk-sensitivity in humans and lower animals: Risk as variance or coefficient of variation', a significant work in psychological review. (Source: web_search_results)

  2004

• Sandeep Mishra and M. L. Lalumière published 'Risk taking, antisocial behavior, and life histories' in 'Evolutionary forensic psychology'. (Source: web_search_results)

  2008

• J. A. Weller and A. Tikir published 'Predicting domain-specific risk taking with the HEXACO personality structure' in the Journal of Behavioral Decision Making. (Source: web_search_results)

  2011

• Sandeep Mishra, M. Gregson, and M. L. Lalumière published 'Framing effects and risk-sensitive decision-making' in the British Journal of Psychology. (Source: web_search_results)

  2012

• Sandeep Mishra published 'Decision-Making Under Risk' in Sage Journals, summarizing research in the field. (Source: web_search_results)

  2014

• RMMagazine published 'The Psychology of Risk' article, featuring insights from Hersh Shefrin and Paul Slovic on the mental processes underlying responses to risky situations. (Source: web_search_results)

  2017-09-01

• Erin Fullerton, Director of Integrated Risk Management, presented on 'THE PSYCHOLOGY OF RISK' at the 'Fitting the Pieces Together' Conference, discussing cognitive biases and risk perception. (Source: web_search_results)

  2019-11-04

Risk

Risk is the possibility of something bad happening, comprising a level of uncertainty about the effects and implications of an activity, particularly negative and undesirable consequences. 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.

Web Search Results

• The Psychology of Risk

  The psychology of risk is the study and understanding of the mental processes underlying our responses to risky situations, the recognition of a risk’s impact, and the development of frameworks that can help individuals make sound judgments in the face of risk. [...] When it comes to the psychology of risk, “there is still a lot of room to go and businesses are only at the beginning in terms of understanding that there are coherent frameworks available that could help them improve the practice of risk management,” said Hersh Shefrin, the Mario L. Belotti professor of finance at Santa Clara University’s Leavey School of Business and the author of Behavioral Risk Management: Managing the Psychology that Drives Decisions and Influences Operational Risk. [...] “Risk is an inherently complex concept and is an invention of the human mind to help people deal with things that can be harmful and dangerous,” said Paul Slovic, professor of psychology at the University of Oregon and president of Decision Research, who has written extensively on how individuals perceive risk differently. “Once we start to characterize events in life with the word ‘risk’ and then try to quantify the level of risk, we are entering the domain of subjectivity and emotion.”

• [PDF] THE PSYCHOLOGY OF RISK - California State University

  THE PSYCHOLOGY OF RISK Erin Fullerton Director of Integrated Risk Management “Fitting the Pieces Together” Conference November 4th – 6th, 2019 Today’s Objectives Learn how to recognize and narrow the gap between perceived risk and actual risk 1. Be able to recognize the most common types of cognitive bias that can interfere with decision-making and risk analysis 2. [...] Learn how to apply techniques to overcome/compensate for cognitive bias and other factors that can skew our perception of and response to risks 3. [...] people tend to remember best the information they hear first and last ZERO RISK BIAS – people tend to favor reducing a small risk to zero over a greater reduction in a larger risk CONFIRMATION BIAS – tendency to listen/give weight to only that information which supports our existing position/beliefs OSTRICH EFFECT – tendency to avoid or ignore negative information AVAILABILITY HEURISTIC – tendency to overestimate the importance of the information that is available to us Slippery Slopes The

• What Are the Psychological Aspects of Risk Mitigation?

  Moreover, the psychological aspects of risk mitigation involve recognizing how emotions directly influence not only individual decisions but also broader risk-related behaviors within groups and societies. People tend to gravitate toward risk-averse strategies during times of uncertainty or crisis, often driven by fear of loss rather than a rational assessment of potential gains. This behavior can be heightened by social narratives, media coverage, and prevailing cultural attitudes toward risk, [...] In terms of psychological aspects of risk mitigation, understanding these biases is part of a broader picture. Psychological factors, such as how risk is perceived emotionally, can influence decisions and behaviors significantly. The interplay between cognitive biases and emotional responses adds layers of complexity to risk evaluation. Therefore, fostering an environment where discussions around risk are open and based on evidence, rather than controlled by individual biases, can lead to a [...] Perception of risk refers to how individuals understand, interpret, and evaluate risks in various contexts, whether in personal safety, financial investments, health choices, or broader societal issues. This cognitive process is not only influenced by statistical data or factual information but also motivated by psychological factors such as personal experiences, cultural background, and social dynamics. The perception of risk plays a critical role in shaping behaviors and attitudes toward risk

• Decision-Making Under Risk - Sandeep Mishra, 2014 - Sage Journals

  Mishra S., Gregson M., Lalumière M. L. (2012). Framing effects and risk-sensitive decision-making. _British Journal of Psychology_, 103, 83-97. Crossref PubMed Web of Science Google Scholar Mishra S., Lalumière M. L. (2008). Risk taking, antisocial behavior, and life histories. In Duntley J., Shackelford T. K. (Eds.), _Evolutionary forensic psychology: Darwinian foundations of crime and law_ (pp. 176-197). New York, NY: Oxford University Press. Crossref Google Scholar [...] Weber E. U., Shafir S., Blais A.-R. (2004). Predicting risk-sensitivity in humans and lower animals: Risk as variance or coefficient of variation. _Psychological Review_, 111, 430-445. Crossref PubMed Web of Science Google Scholar Weller J. A., Tikir A. (2011). Predicting domain-specific risk taking with the HEXACO personality structure. _Journal of Behavioral Decision Making_, 24, 180-201. Crossref Web of Science Google Scholar [...] Bateson M., Kacelnik A. (1998). Risk-sensitive foraging: Decision-making in variable environments. In Dukas R. (Ed.), _Cognitive ecology_ (pp. 297-341). Chicago, IL: University of Chicago Press. Google Scholar Batson C. D., Shaw L. L., Oleson K. C. (1992). Differentiating affect, mood, and emotion: Toward functionally based conceptual distinctions. In Clark M. S. (Ed.), _Review of personality and social psychology_ (Vol. 13, pp. 294-326). Newbury Park, CA: SAGE. Google Scholar

• Current Theories of Risk and Rational Decision Making - PMC

  Two basic research strategies or approaches to doing science have been applied to the study of risk and uncertainty: The first, which characterizes work appearing in prominent adult journals (e.g., Psychological Science, Journal of Experimental Psychology: Learning, Memory, and Cognition, and Psychonomic Bulletin & Review), mainly concerns the psychology of the college sophomore. That is, it consists of experiments conducted with young adults that are aimed at understanding the processes that