Financial professionals have a great deal of discretion concerning how to relay information about the risk of financial products to their clients. This paper introduces a new risk tool to communicate ...the risk of investment products, and it examines how different risk-presentation modes influence risk-taking behavior and investors' recall ability of the risk-return profile of financial products. We analyze four different ways of communicating risk: (i) numerical descriptions, (ii) experience sampling, (iii) graphical displays, and (iv) a combination of these formats in the "risk tool." Participants receive information about a risky and a risk-free fund and make an allocation between the two in an experimental investment portfolio. We find that risky allocations are elevated in both the risk tool and experience sampling conditions. Greater risky allocations in the risk tool condition are associated with decreased risk perception, increased confidence in the risky fund, and a lower estimation of the probability of a loss. In addition to these favorable perceptions of the risky fund, participants in the risk tool condition are more accurate on recall questions regarding the expected return and the probability of a loss. We find no evidence of greater dissatisfaction with returns in these conditions, and we observe a willingness to take on similar levels of risk in subsequent allocations.
This paper was accepted by Teck Ho, behavioral economics.
Getting risk right Kabat, Geoffrey C
2016., 20161122, 2016, 2016-11-22
eBook
Do cell phones cause brain cancer? Does BPA threaten our health? How safe are certain dietary supplements, especially those containing exotic herbs or small amounts of toxic substances? Is the HPV ...vaccine safe? We depend on science and medicine as never before, yet there is widespread misinformation and confusion, amplified by the media, regarding what influences our health. In Getting Risk Right, Geoffrey C. Kabat shows how science works—and sometimes doesn't—and what separates these two very different outcomes. Kabat seeks to help us distinguish between claims that are supported by solid science and those that are the result of poorly designed or misinterpreted studies. By exploring different examples, he explains why certain risks are worth worrying about, while others are not. He emphasizes the variable quality of research in contested areas of health risks, as well as the professional, political, and methodological factors that can distort the research process. Drawing on recent systematic critiques of biomedical research and on insights from behavioral psychology, Getting Risk Right examines factors both internal and external to the science that can influence what results get attention and how questionable results can be used to support a particular narrative concerning an alleged public health threat. In this book, Kabat provides a much-needed antidote to what has been called "an epidemic of false claims."
This paper considers a dual channel supply chain consisting of a risk-neutral supplier and a risk-averse retailer, in which the market demand is uncertain and the supplier opens an e-channel, thus ...directly participating in the market. At the beginning of the sales season, the supplier and the retailer construct their initial stocks, and they follow a consistent pricing strategy. Under the Value-at-Risk (VaR) criterion and the Conditional Value-at-Risk (CVaR) criterion, we formulate the problem as a Stackelberg game model and obtain the equilibrium solutions in the decentralized and centralized situations. Based on the advantage of the CVaR measure, we further explore the effects of the retailer's risk indicator on the retail price, the ordering quantities of the two channels and the profits of the two members, and the total profits of the supply chain. Further, an improved risk-sharing contract is presented to coordinate the dual-channel supply chain and ensures that both supply chain members achieve a win–win outcome. In addition, we make an extension to the case of the inconsistent prices in the two channels, and we also verify that the dual-channel supply chain can be coordinated by the similar improved risk-sharing contract.
The paper discusses the limits to market-based risk transfer in the financial system and the implications for the management of systemic long-term financial risks. Financial instruments or markets to ...transfer and better manage these risks across institutions and sectors are, as yet, either nascent or nonexistent. As such, the paper investigates why these markets remain "incomplete." It also explores a range of options by which policymakers may encourage the development of these markets as part of governments' role as a risk manager.
While the methods of risk analysis are generally based on objective measurements, the subjective assessment of risk, such as risk perception, is currently considered a crucial aspect in the context ...of flood risk management. Risk perception is regarded as an assessment of the perceived probability of hazard and the perceived probability of the results (most often—negative consequences). The work attempts to answer the question: What determines flood risk perception? The knowledge of the factors influencing flood risk perception can solve the issue of the society’s underestimation of flood risk. This issue was considered both in terms of the impact of particular factors on flood risk perception and the interrelationship between three characteristics of flood risk perception: preparedness, worry and awareness. The results were developed based on critical analysis of the empirical research. The review shows that the way particular characteristics determine flood risk perception is not clear and many authors show the diverse conclusions from the similar research. Taking into account various research results, the following factors were distinguished: primary (which clearly influence risk perception), secondary (which influence it unclearly and require further research) and intervening (often describing the context). The organization of the results of the research on the flood risk assessment conducted herein aims to improve the understanding of the human perception of flood risk and, as a result, will lead to the decrease in flood risk by improving the communication of the issue and motivating the residents of the endangered areas to take actions that reduce the negative effects of floods.
Throughout these guidelines similar to the 2013 guidelines, consistent attention is given to a clinician–patient risk discussion for making shared decisions. Besides major risk factors of the pooled ...cohort equations (PCE), the clinician–patient risk discussion can include other risk-enhancing factors, and when risk status is uncertain, a coronary artery calcium (CAC) score is an option to facilitate decision-making in adults ≥40 years of age. Another study projected a similar improvement in economic value (S7.1-6). ...raising the threshold for LDL-C on maximal statin therapy to initiate a PCSK9 inhibitor should improve its cost-effectiveness (Figure 3). ...the value of PCSK9 inhibitor therapy in FH is uncertain.8 Limitations and Knowledge Gaps 8.1 Randomized Controlled Trials ACC/AHA guidelines are based largely on the outcomes of RCTs. ...the clinician–patient risk discussion should include more than the initial treatment decision.
Everyday we face decisions that carry an element of risk and uncertainty. The ability to analyze, predict, and prepare for the level of risk entailed by these decisions is, therefore, one of the most ...constant and vital skills needed for analysts, scientists and managers. Risk analysis can be defined as a systematic use of information to identify hazards, threats and opportunities, as well as their causes and consequences, and then express risk. In order to successfully develop such a systematic use of information, those analyzing the risk need to understand the fundamental concepts of risk analysis and be proficient in a variety of methods and techniques. Risk Analysis adopts a practical, predictive approach and guides the reader through a number of applications. Risk Analysis: Provides an accessible and concise guide to performing risk analysis in a wide variety of fields, with minimal prior knowledge required. Adopts a broad perspective on risk, with focus on predictions and highlighting uncertainties beyond expected values and probabilities, allowing a more flexible approach than traditional statistical analysis. Acknowledges that expected values and probabilities could produce poor predictions - surprises may occur. Emphasizes the planning and use of risk analyses, rather than just the risk analysis methods and techniques, including the statistical analysis tools. Features many real-life case studies from a variety of applications and practical industry problems, including areas such as security, business and economy, transport, oil & gas and ICT (Information and Communication Technology). Forms an ideal companion volume to Aven's previous Wiley text Foundations of Risk Analysis. Professor Aven's previous book Foundations of Risk Analysis presented and discussed several risk analysis approaches and recommended a predictive approach. This new
text expands upon this predictive approach, exploring further the risk analysis principles, concepts, methods and models in an applied format. This book provides a useful and practical guide to decision-making, aimed at professionals within the risk analysis and risk management field.
Before Fukushima, the most notorious large-scale nuclear accident the world had seen was Chernobyl in 1986. The fallout from Chernobyl covered vast areas in the Northern Hemisphere, especially in ...Europe. Belarus, at the time a Soviet republic, suffered heavily: nearly a quarter of its territory was covered with long-lasting radionuclides. Yet the damage from the massive fallout was largely imperceptible; contaminated communities looked exactly like noncontaminated ones. It could be known only through constructed representations of it. InThe Politics of Invisibility, Olga Kuchinskaya explores how we know what we know about Chernobyl, describing how the consequences of a nuclear accident were made invisible. Her analysis sheds valuable light on how we deal with other modern hazards -- toxins or global warming -- that are largely imperceptible to the human senses.Kuchinskaya describes the production of invisibility of Chernobyl's consequences in Belarus -- practices that limit public attention to radiation and make its health effects impossible to observe. Just as mitigating radiological contamination requires infrastructural solutions, she argues, the production and propagation of invisibility also involves infrastructural efforts, from redefining the scope and nature of the accident's consequences to reshaping research and protection practices. Kuchinskaya finds vast fluctuations in recognition, tracing varyingly successful efforts to conceal or reveal Chernobyl's consequences at different levels -- among affected populations, scientists, government, media, and international organizations. The production of invisibility, she argues, is a function of power relations.
The relevance of blood lipid concentrations to long-term incidence of cardiovascular disease and the relevance of lipid-lowering therapy for cardiovascular disease outcomes is unclear. We ...investigated the cardiovascular disease risk associated with the full spectrum of bloodstream non-HDL cholesterol concentrations. We also created an easy-to-use tool to estimate the long-term probabilities for a cardiovascular disease event associated with non-HDL cholesterol and modelled its risk reduction by lipid-lowering treatment.
In this risk-evaluation and risk-modelling study, we used Multinational Cardiovascular Risk Consortium data from 19 countries across Europe, Australia, and North America. Individuals without prevalent cardiovascular disease at baseline and with robust available data on cardiovascular disease outcomes were included. The primary composite endpoint of atherosclerotic cardiovascular disease was defined as the occurrence of the coronary heart disease event or ischaemic stroke. Sex-specific multivariable analyses were computed using non-HDL cholesterol categories according to the European guideline thresholds, adjusted for age, sex, cohort, and classical modifiable cardiovascular risk factors. In a derivation and validation design, we created a tool to estimate the probabilities of a cardiovascular disease event by the age of 75 years, dependent on age, sex, and risk factors, and the associated modelled risk reduction, assuming a 50% reduction of non-HDL cholesterol.
Of the 524 444 individuals in the 44 cohorts in the Consortium database, we identified 398 846 individuals belonging to 38 cohorts (184 055 48·7% women; median age 51·0 years IQR 40·7–59·7). 199 415 individuals were included in the derivation cohort (91 786 48·4% women) and 199 431 (92 269 49·1% women) in the validation cohort. During a maximum follow-up of 43·6 years (median 13·5 years, IQR 7·0–20·1), 54 542 cardiovascular endpoints occurred. Incidence curve analyses showed progressively higher 30-year cardiovascular disease event-rates for increasing non-HDL cholesterol categories (from 7·7% for non-HDL cholesterol <2·6 mmol/L to 33·7% for ≥5·7 mmol/L in women and from 12·8% to 43·6% in men; p<0·0001). Multivariable adjusted Cox models with non-HDL cholesterol lower than 2·6 mmol/L as reference showed an increase in the association between non-HDL cholesterol concentration and cardiovascular disease for both sexes (from hazard ratio 1·1, 95% CI 1·0–1·3 for non-HDL cholesterol 2·6 to <3·7 mmol/L to 1·9, 1·6–2·2 for ≥5·7 mmol/L in women and from 1·1, 1·0–1·3 to 2·3, 2·0–2·5 in men). The derived tool allowed the estimation of cardiovascular disease event probabilities specific for non-HDL cholesterol with high comparability between the derivation and validation cohorts as reflected by smooth calibration curves analyses and a root mean square error lower than 1% for the estimated probabilities of cardiovascular disease. A 50% reduction of non-HDL cholesterol concentrations was associated with reduced risk of a cardiovascular disease event by the age of 75 years, and this risk reduction was greater the earlier cholesterol concentrations were reduced.
Non-HDL cholesterol concentrations in blood are strongly associated with long-term risk of atherosclerotic cardiovascular disease. We provide a simple tool for individual long-term risk assessment and the potential benefit of early lipid-lowering intervention. These data could be useful for physician–patient communication about primary prevention strategies.
EU Framework Programme, UK Medical Research Council, and German Centre for Cardiovascular Research.
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