Risk culture: An alternative approach to handling risks

Abstract

This chapter consists of two parts: the first part describes existing approaches to handling risk and uncertainty and points out their limitations, whereas the second part introduces a model for risk culture, which aims to overcome these limitations and integrates different lines of research. In more detail, the first part starts with a description of risk management, which is built on the ideas of the Age of Enlightenment, and centers rationality as the main principle of decision making. This description is followed by fast-and-frugal decision trees, which aim to reduce the complexity of dealing with risks to simple guidelines and, thereby, enable fast decision making in resource-restricted situations. Finally, as a third existing approach to handling risk, we discuss intuition, which builds on the competence of experts. Whereas all three approaches have their practical usefulness, they also have limitations. None of these approaches are capable of handling every kind of risk ranging from daily situations to calculable and predictable risk and emerging uncertainty. Therefore, we argue in favor of a more holistic view in the second part of the chapter: risk culture can be understood as the way people handle risks in a specific social context. It is essential to understand the relevant factors of risk culture and their interactions in order to enhance risk competence. We introduce a model of risk culture that contains different levels of accessibility ranging from formal structures, like documented risk management procedures, over trusted rules of thumb for decision making, to basic assumptions like implicit beliefs or shared experiences in handling risks. Furthermore, the model considers relevant factors for the dimensions of individuals, social interactions, and organizational structures. We demonstrate how the model can be used as an integrative framework for existing risk research and sketch an avenue for future research, in particular, for the development of a measurement, and for the practical application of risk culture.