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Risk Analysis and Risk Management in an Uncertain World

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  • Howard Kunreuther

Abstract

The tragic attacks of September 11 th and the recent bioterrorist threats have raised a set of issues regarding how we deal with events where there is considerable ambiguity and uncertainty on the likelihood of their occurrence and their potential consequences. This paper discusses how one can link the tools of risk assessment and our knowledge of risk perception to develop risk management options for dealing with extreme events. In particular it suggests ways that the expertise of members from the Society for Risk Analysis can apply their talents to the risks associated with terrorism and discusses the changing roles of the public and private sectors in dealing with extreme events.

Suggested Citation

  • Howard Kunreuther, 2001. "Risk Analysis and Risk Management in an Uncertain World," Center for Financial Institutions Working Papers 02-08, Wharton School Center for Financial Institutions, University of Pennsylvania.
    • Handle: RePEc:wop:pennin:02-08
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    File URL: http://fic.wharton.upenn.edu/fic/papers/02/0208.pdf
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    References listed on IDEAS

    as
    1. Kunreuther, Howard & Novemsky, Nathan & Kahneman, Daniel, 2001. "Making Low Probabilities Useful," Journal of Risk and Uncertainty, Springer, vol. 23(2), pages 103-120, September.
    2. Neil D. Weinstein & Kathryn Kolb & Bernard D. Goldstein, 1996. "Using Time Intervals Between Expected Events to Communicate Risk Magnitudes," Risk Analysis, John Wiley & Sons, vol. 16(3), pages 305-308, June.
    3. Fischhoff, Baruch, 1994. "What forecasts (seem to) mean," International Journal of Forecasting, Elsevier, vol. 10(3), pages 387-403, November.
    4. Howard Kunreuther & Geoffrey Heal, 2002. "Interdependent Security: The Case of Identical Agents," NBER Working Papers 8871, National Bureau of Economic Research, Inc.
    5. Stone, Eric R. & Yates, J. Frank & Parker, Andrew M., 1994. "Risk Communication: Absolute versus Relative Expressions of Low-Probability Risks," Organizational Behavior and Human Decision Processes, Elsevier, vol. 60(3), pages 387-408, December.
    6. Hsee, Christopher K & Kunreuther, Howard C, 2000. "The Affection Effect in Insurance Decisions," Journal of Risk and Uncertainty, Springer, vol. 20(2), pages 141-159, March.
    7. Slovic, Paul & Finucane, Melissa & Peters, Ellen & MacGregor, Donald G., 2002. "Rational actors or rational fools: implications of the affect heuristic for behavioral economics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 31(4), pages 329-342.
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    Cited by:

    1. Ioan TalpoÅŸ & Cosmin Enache, 2007. "Public Finance And Extreme Events," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(9), pages 1-3.

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