Question

Summarize Risk Perceptions, Appetite and Preparedness concepts. Try to provide set of examples from practice relating the concepts.

Answer 1

Risk perceptions are defined as the subjective judgement about the risk severity and its characteristics. Example risks perceived by natural calamities like flood and earthquakes.

Risk appetite is the risk level any individual/organization is willing to take. Investments in various assets is done on the basis of individual/organization risk appetite.

Risk preparedness are the steps or actions taken to mitigate any loss arising from any activity planned or unplanned. There are multiple ways in which organization can plan for risk by forecasting in future and making contingency plans and assign contingency resources. Example Fire department team in an organization to handle any unforeseen events.