Some people are risk averse, choosing the safest option whenever they are able to, whereas others find risk-taking fun and exhilarating. Making almost any decision involves weighing up the risks – whether that’s relatively harmless endeavours involving minimal risks or high-risk activities that could have life-changing consequences.
There are a number of things that affect the degree of risk that an individual is prepared to expose themselves to. A number of things can alter the way a person feels about the level of risk they are prepared to take, including:
- Family history
- Life experience
- Statistical likelihood
- Emotional response
- Personal preference
- Threat perception
- Wider decision-making ability
- Cultural values
- Social setting
- Input from third parties
When people are considering exposing themselves to risk, the way they perceive it may be completely at odds with the real likelihood of any given outcome. Those that are particularly risk-averse may overestimate the likelihood of things going wrong, whereas habitual risk-takers may underestimate the odds of a negative outcome.
Risk-taking in daily life
Almost everything carries some degree of risk, from getting out of bed in the morning to jumping from a plane with a parachute strapped to you. While some risks may seem obvious, almost every decision carries with it some degree of risk that may need to be managed.
Insurance companies work on the basis of assessing the risks involved in a variety of activities, from water skiing to commuting to work. This means that almost everything can be quantified in terms of the risk it poses, from parking your car underneath a streetlamp to choosing a holiday destination.
As technology has become more and more advanced, the risks of specific outcomes can be predicted more closely, and the vast amount of data available can be analyzed to provide statistical data on almost any subject and activity.
One popular activity worth analyzing in conjunction with risk-taking is gambling. Some people may have a greater risk appetite and build enormous accumulators on their football bets. While others prefer playing it safe, opting for smaller wins. The psychology behind this can make for fascinating research, finding out why people gamble the way they do and how it relates to their risk appetite. But those that specifically want to reduce the risks of their gambling can easily do so by looking up online review sites and finding the top 10 Canadian online casinos – helping people make more informed decisions and thus balancing the risks a bit more.
Optimism vs pessimism
In some situations, balancing risk can come down to whether an individual generally tends towards optimism or pessimism. Even with exactly the same information, there can be big differences in the way someone who is generally optimistic views risk versus the way someone generally pessimistic sees it.
There may be a counterintuitive element to the predisposition of an optimist to assess risk when they believe, for example, that the consequences could be significant. Some people believe that their personal risk is lower than others, despite there being no logical reason to think that.
There are other situations in which even an optimistic person may believe that they are exposed to a greater than average risk due to feeling as though they aren’t in control, for example. This is true in cases such as fear of flying, where an individual may well understand that the risk of an incident is much higher in a car, but they perceive the risk of flying as more concerning because of the lack of control they have over the situation.
Assessing risk
However, there is evidence to suggest that humans are not necessarily very good at assessing risks accurately. We find it hard to be objective about the risks that we take, and this can be enhanced by cultural differences.
The degree to which risk is prioritized can vary from country to country, and this can confuse the process of risk assessment as well. In some cultures, it is seen as important to allow children independence, and it is not unusual to see children as young as five using mass transit systems alone.
In other countries, this would be considered a sign of negligence that could result in intervention by law enforcement and social services. The degree to which a society considers something to be risky can have an impact on the actual risk involved in a situation.
Confirmation bias also plays a big part in the way we perceive risk – despite the vast amount of information and evidence available online, it is easy to seek out data that supports a particular view. Similarly, those who encounter risk every day may have a skewed perception of the risks involved in other activities, falsely believing them to be less risky based on their artificially heightened sense of what is ‘normal’.
While it is impossible to live without taking any risks, most of us are able to balance the risks and rewards of everyday life without too much difficulty.
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