Risks Definitions and Measurement: An exercise of Power and Judgment
Risks or we can say uncertainties? Are both concepts synonymous? Maybe, but is believed in the literature that the bigger the uncertainties the bigger the risks (Kahneman, 2011). They have a positive correlation. But what is risk anyway? And what is uncertainty?
There are multiple definitions of both words. My idea is to have a brief conversation about the second: Risks; I want to discuss what are their possible definitions and impact on Measurement?
First, Three Considerations about Risk:
- Risk does not exist “out there,” independent of our minds and cultures, waiting to be measured (Paul Slovic, 2014).
- Human beings have invented the concept of risk to help them understand and cope with the dangers and uncertainties of life (Paul Slovic, 2014).
- There is no such thing as “real risk” or “objective risk.” The nuclear engineer’s probabilistic risk estimate for a nuclear accident or the toxicologist’s quantitative estimate of a carcinogenic risk are both based on theoretical models, whose structure is subjective and assumption-laden, and whose inputs are dependent on judgment (Slovic and Lichrenstein, 2005).
Thus, judgement is a key word when talking about risk because the risk is a conclusion of a judgement. And Judgments are contingent on many factors
Defining risk is an exercise of power!
For the literature on decision-making under uncertainty of social psychology (Kanhenamn, Slovic 2011) when we talk about risks, we are always talking about perceptions of risk.
Prof Slovic (2013) says:
Whoever controls the definition of risk controls the rational solution to the problem at hand.
If you define risk one way, then one option will rise to the top as the most cost-effective or the safest or the best. however, if you define it another way, perhaps incorporating qualitative characteristics(such as involuntary exposure) and other contextual factors, you will likely get a different ordering of your action solutions (Slovic, 2014).
Therefore, the way we define risk will impact preferences for plans of action. meaning The definition of risk matters, and the language we use to communicate it too. Thus, defining risk is an exercise of power (Slovic and Lichrenstein, 2005).
Possible Definitions of Risk
We can categorise risks in 4 dimensions according to professor Paul Slovic (2014). There are 4 ways we tend to think about risks in financial markets, industries, economics and so on;
- Risks as hazards
- “Which risks should we rank?”
2. Risk as probability
- “What is the risk of a birth defect after exposure to a teratogen?
3. Risk as a consequence
•“What is the risk of letting your parking meter expire?”
Answer: “Getting a ticket.”
4. Risk as potential adversity
- “How great is the risk of riding a motorcycle?”
Here, the risk is some unspecified blend of probability and severity of consequence.
Measuring Risks
It is important to remember that risk is based on theoretical models, whose structure is subjective and assumption-laden, and whose inputs are dependent on judgment.
Every way of summarizing deaths embodies its own set of values
For example:
–Counting fatalities gives equal weight to:
–young and old
–painful and nonpainful
–voluntary and involuntary
–fair (beneficial) and unfair (no benefit)
Look at the example below of coal mining, the way you measure risk will create different visualisations and weight differently on human judgements.
Conclusion remarks :
There are, therefore. different possible definitions of risk. The way we define or frame risks will impact how we measure and weigh them in our judgments. And Judgements are contingent on many factors, being affected by how we perceive information. Risks are then, mainly, perceptions. How we perceive risks will affect how we accurately assess them.
Referencias →
https://kamagroup.org/2012/01/24/manage-risk-in-6-steps/
Paul Slovic, Baruch Fischhoff, Sarah Lichtenstein January 2005; Facts and Fears: Understanding Perceived Risk, DOI: 10.1007/978–1–4899–0445–4_9
The Ethics of Preference Management: Risk, Values, and Decisions. Paul Slovic- Decision Research and University of Oregon, University of Zurich September 5, 2014;
