Risk perception is the assessment a person makes of the nature and severity of the risk. While risk perception is subject to detailed study and analysis for natural calamities, disease outbreaks and for industrial projects, an individual usually make many decisions based on his risk perception.
For a particular action or event , the risk perception may differ from person to person. It depends on his / her past experience and objectivity. For example, when the stock market is at all time low, most investors do not buy shares, since they perceive that the investing risk is high. However, since the prices cannot decline any further, there is little additional risk involved.
Trust is an important factor which affects the risk perception of a person. If the person or organization handling the particular event is considered reliable, the risk perception is usually lower.
Risk is used to define how a future event or process can negatively affect an asset or any property or feature that is valued. It is also considers the possibility that an event will occur which affects the attainment of the objectives. The risk is measured in terms of both the impact and the likelihood of a particular event occurring.
Based on the specific application and situation, risk can be defined qualitatively as well as quantitatively. There is some amount of risk in our daily life, and based on our qualitative judgment of the risk involved we often take a decision.
In engineering when the amounts invested are large and errors can lead to loss of life and money, risk is defined more precisely.
Risk = probability of an accident X losses caused by an accident
The probability of an accident depends on the past records / history, but for recently developed technologies like those used in nuclear reactors, not much information is available
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