Risk awareness refers to the extent to which people or organizations are aware of risks and the strategies in place to manage them. This can include understanding the potential consequences of risks, as well as the measures that are in place to mitigate or prevent those risks. Risk awareness is an important aspect of risk management, as it enables individuals and organizations to make informed decisions about how to handle potential risks.
Risk awareness can vary at different levels, including within societies, organizations, groups, and individuals. It is important for organizations to cultivate a culture of risk awareness, as this can help to identify and address potential risks more effectively. This can involve providing training and resources to help people understand risks and risk management strategies, as well as promoting open communication and transparency about risks.
Unawareness of risk such as an individual who purchases a home in an area at high risk for forest fires without any knowledge of this risk.
Performing the due diligence to identify risks such as a home buyer who researches the air quality in an area before purchasing a house.
Analyzing identified risks including factors such as probability, impact and moment of risk.
Risk identification and analysis that is performed with an optimism bias. For example, happily assuming that interest rates will go down soon in a financial risk calculation.
Using defensive pessimism to identify risks and conservative estimates of risk probability and impact.
Understating or overstating risks due to motivated reasoning. For example, a project manager who is eager to please an executive so they underestimate the risk a project could be late or over budget.
A risk that is missed by risk identification due to optimism bias, motivated reasoning or unknown unknowns.
A risk that is fully documented somewhere that becomes knowledge waste due to a lack of communication.
A risk that has been communicated to anyone it can impact.
Dread risk is a class of risk that people find particularly fearsome or emotional. This tends to result in an overestimate of such risks and a desire to minimize such risks whatever the cost. Awareness of dread risks is typically high but they may be surrounded in popular misperceptions.
A risk may be communicated without many people actually taking interest or fully understanding the risk. Risk comprehension is the degree to which people actually understand a risk including its probability, impact and treatment. This may require over-communicating a risk using storytelling to make the information consumable. For example, a government that communicates the health risks of smoking for many decades using mass media and education systems.
Risk culture are the norms, expectations and processes that a society, organization or group uses to identify, assess, communicate and manage risk. For example, a manufacturing firm where it is a norm for managers to communicate safety risks on an regular basis such that safety risks and preventative measures are well understood.