Framing risks and uncertainties 13
Disciplinary approaches to risk
Most risk work has its origins in one of four subject areas: insurance and finance;
natural hazards and disasters; technological innovation; or health. It has been
inspired by multiple disciplines, such as mathematics, economics, psychology,
and sociology, in an effort to reduce and manage uncertainty (Renn, 2008).
Since the 1980s, we observe a shift from mathematical- and engineering- based
work towards approaches stemming from social sciences, which is in line with
the expansion of risk analysis from risk assessment to risk management and
finally to risk communication. This represents a move towards the idea of subjective risk perceptions (Glickman and Gough, 1990).
Natural science approaches to risk are, for example, causal models in medicine and chemistry. Causal models test safety- related issues with organic and
artificial substances by means of experiments. Mathematics provide the basis for
actuarial and probabilistic risk assessment, which found its practical applications
in the insurance sector and in the context of natural hazards. It is in these areas
where natural sciences and social sciences, particularly economics, find common
ground.
The natural sciences consider risks as objective and independent of social
contexts. The social sciences assess risk either through the individual or through
the collective. The economics of risk address risk taking and risk attitudes at the
level of the individual. With their seminal work, and departing from the
expected utility model, Kenneth Arrow and John Pratt laid the groundwork for
an extensive literature on individual behaviour towards risk and risk aversion
(Machina and Viscusi, 2014, p. xxxi). Indeed, the approaches of behavioural
economics largely coincide with psychological methods of risk analysis, which
also consider risk at the level of the individual.
The psychology of risk is in stark contrast to much of the mathematical risk
analysis in the natural sciences and finance (Raue, Lermer, and Streicher,
2018). It traditionally followed a cognitive approach, assuming rational choosers who are constrained by their capacity to reason and learn (bounded rationality). Value- expectancy theory, the theory of reasoned action, and the theory
of planned behaviour have been frequently used in psychological risk (Ajzen,
1991; Wigfield and Eccles, 2000). Classical methods such as experiments, observations, and interviews have been complemented with psychometric methods
to measure risk perception and risk- related behaviour, which are also popular in
behavioural economics (Slovic, 2000). The main tools here are standardised
survey instruments. They are frequently criticised for systemic biases they may
create, and sociologists have insisted on the importance of more in- depth
methods to understand risks. Discourse analysis and in- depth interviews are the
key methods used for this in sociology.
The sociology of risk, unlike economic and psychological approaches, applies
at the collective level and is grounded in the assumption that risk is socially
constructed. It purports that cultural biases and practices across social groups are
effective drivers of ideas about risk and risk management. Prominent approaches
Disciplinary approaches to risk
Most risk work has its origins in one of four subject areas: insurance and finance;
natural hazards and disasters; technological innovation; or health. It has been
inspired by multiple disciplines, such as mathematics, economics, psychology,
and sociology, in an effort to reduce and manage uncertainty (Renn, 2008).
Since the 1980s, we observe a shift from mathematical- and engineering- based
work towards approaches stemming from social sciences, which is in line with
the expansion of risk analysis from risk assessment to risk management and
finally to risk communication. This represents a move towards the idea of subjective risk perceptions (Glickman and Gough, 1990).
Natural science approaches to risk are, for example, causal models in medicine and chemistry. Causal models test safety- related issues with organic and
artificial substances by means of experiments. Mathematics provide the basis for
actuarial and probabilistic risk assessment, which found its practical applications
in the insurance sector and in the context of natural hazards. It is in these areas
where natural sciences and social sciences, particularly economics, find common
ground.
The natural sciences consider risks as objective and independent of social
contexts. The social sciences assess risk either through the individual or through
the collective. The economics of risk address risk taking and risk attitudes at the
level of the individual. With their seminal work, and departing from the
expected utility model, Kenneth Arrow and John Pratt laid the groundwork for
an extensive literature on individual behaviour towards risk and risk aversion
(Machina and Viscusi, 2014, p. xxxi). Indeed, the approaches of behavioural
economics largely coincide with psychological methods of risk analysis, which
also consider risk at the level of the individual.
The psychology of risk is in stark contrast to much of the mathematical risk
analysis in the natural sciences and finance (Raue, Lermer, and Streicher,
2018). It traditionally followed a cognitive approach, assuming rational choosers who are constrained by their capacity to reason and learn (bounded rationality). Value- expectancy theory, the theory of reasoned action, and the theory
of planned behaviour have been frequently used in psychological risk (Ajzen,
1991; Wigfield and Eccles, 2000). Classical methods such as experiments, observations, and interviews have been complemented with psychometric methods
to measure risk perception and risk- related behaviour, which are also popular in
behavioural economics (Slovic, 2000). The main tools here are standardised
survey instruments. They are frequently criticised for systemic biases they may
create, and sociologists have insisted on the importance of more in- depth
methods to understand risks. Discourse analysis and in- depth interviews are the
key methods used for this in sociology.
The sociology of risk, unlike economic and psychological approaches, applies
at the collective level and is grounded in the assumption that risk is socially
constructed. It purports that cultural biases and practices across social groups are
effective drivers of ideas about risk and risk management. Prominent approaches