MANAGEMENT SCIENCE AND SYSTEMS

Management Science and Systems

Management Science and Systems

Q- 1 The authors identify two limitations of Project Risk Registers on page 39 of the case study. First, “the risk registers become a bureaucratic procedure” and, second, “risks identified in the register tend to address only a small proportion of all types of risk”. Summarise other problems associated with Project Risk Registers identified by the authors. From your own wider reading, outline any other limitations of Project Risk Registers.

Risk perception is the subjective judgment that people make about exposure to a hazard, the probability of occurrence and producing harm, and the dimensions of the event in a context of limited knowledge. That hazard may be of a natural, technological, environmental, or health nature. Each person has to live with risk and resolve in a situation of limited rationality because information is assumed to be costly, incomplete, and uncertain. All humans are exposed to risk because every human activity involves some degree of risk as a part of everyday life and, therefore, individuals seek to minimize it guided by their particular perception.

This is very important but is not the only determining factor of human behavior; perception does not necessarily correlate with the actual risk dimensions because other personal, social, and political factors are intervening in the shaping of the individual and social understanding of risk. Experts are predisposed to think of risk assessment and management as objective and rational processes, but experts, scientists, and decision makers are still influenced by their perceptions as individuals. Although the term risk perception has a wide acceptance, some authors prefer the concept risk judgment.

The principal factors that affect the perception and determine acceptability of risk, level of concern, and ultimately risk-taking are: the characteristics of the hazard, the characteristics of the individual, and how the information is communicated.

Given that different types of risk generate different behavioral reactions, identifying their nature facilitates the comprehension of the relationship. Individuals overestimate the risk associated with unusual hazards, such as a meteorite fall, and novel hazards, such as SARS, while they tend to accept more common risks that are regarded as an inevitable part of everyday life, such as driving, and those that add value to life, such as practicing high risk sports—scuba diving, skiing, rock climbing, etc. Low frequency hazards induce some individuals to ignore the risk and to not take actions to minimize their exposure but, on the contrary, to increase it. This is linked to cost judgment—if individual benefits are perceived to be lower than mitigation costs, then inaction occurs, and people maintain or increase vulnerability.

A risk taken under the personal control and responsibility of an individual—a voluntary exposure—is more readily accepted than an involuntary risk, which is outside the control of the individual, such as driving a car versus flying. There is more concern about hazards which, despite having a low frequency, are associated with a low survival rate. There is less concern about those that are frequent and have more victims, and are ...