Risk, risk perception, risk management – A review of the literature

This paper aims to summarize the findings of risk research across various fields and examine their impact on risk management practices. The fundamental approaches to risk discussed in this paper suggest that the concepts of probability used in studying processes in any area of life fall under the domain of epistemology rather than ontology. This implies that subjectivity cannot be entirely eliminated from risk management. This inherent subjectivity influences risk-taking willingness, decision-making, and risk evaluation. If risks are viewed as mass phenomena, there are several objective (quantitative) methods available to estimate their probability and impact. However, the importance of subjective (qualitative) professional judgment increases as the volume of available data decreases. Regardless of the risk analysis method used, a basic principle is that the costs of risk management should not exceed the risk itself, which also determines the scope of the risk analysis to be conducted.