risk aversion

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Related to Risk attitude: Risk perception, Risk averse

Risk Aversion

The subjective tendency of investors to avoid unnecessary risk. It is subjective because different investors have different definitions of unnecessary. An investor seeking a large return is likely to see more risk as necessary, while one who only wants a small return would find such an investment strategy reckless. However, most rational economic actors are sufficiently risk averse such that, given two investments with the same return and different levels of risk, they would choose the less risky investment.

risk aversion

The tendency of investors to avoid risky investments. Thus, if two investments offer the same expected yield but have different risk characteristics, investors will choose the one with the lowest variability in returns. If investors are risk averse, higher-risk investments must offer higher expected yields. Otherwise, they will not be competitive with the less risky investments.

risk aversion

the tendency for managers, consumers and other decision-makers to avoid undertaking risks and to choose less risky alternatives. See RISK PREMIUM.

risk aversion

the tendency for managers, consumers and other decision makers to avoid undertaking risks and to choose less risky alternatives. See RISK PREMIUM.
References in periodicals archive ?
A comparison of panel A with panel B in Table 7 may be considered a first test of the possible effects of the omission of risk attitude.
This is a key reason why driving consistency around risk attitude and risk culture is a central objective of an emerging risk management program.
In order to compare risk attitude across participants moving to countries with different degrees of cultural distance from China, destinations were classified into Asia, the US, and Europe.
Based on our findings, we could, in principle, use millions of existing medical brain scans to assess risk attitudes in populations," relates Levy, a former NYU postdoctoral fellow.
This concept captures opportunity-based behaviour and consists of six behavioural dimensions: international motivation, innovativeness, risk attitude, market orientation (which includes proactiveness), learning orientation and networking orientation (towards competitors and non-competitors).
These theories mainly studied the distribution of return skewness from macroscopic perspectives, but with the development of behavioral financial theory, more scholars came to consider the impact of investors risk attitudes and behavioral biases on the skewness of return distribution from microscopic perspectives.
Have a risk attitude that empowers all in the business to take appropriate risks that drive growth and opportunity.
The gender stereotype that women are more risk averse than men appears to be a salient anchor, regarded by predictors as relevant, that colors assessments of risk attitude.
Following the above explained Khaneman and Tversky's framework, the author examines the effect that point-referencing-that is, the risk attitude adopted by the bank depending on whether it considers itself on the psychological domains of losses or the domain of gains--has on the degree of risk-taking in banks.
The report also looked at risk attitude among engineers.
Risk culture, being a subset of overall culture, takes risk knowledge down to the daily risk governance and risk attitude you want established and reinforced in your company.

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