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Risk management class Discuss risk attitudes of individuals and identifying them. Between 200 and 300 word

Risk management class

Discuss risk attitudes of individuals and identifying them.

Between 200 and 300 word

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ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

Risk Attitude

Risk attitude is the behaviour of individuals under uncertainty.

There are three types of attitudes:
1. Risk seeking.
2. Risk neutral.
3. Risk Aversion.
4. Risk tolerance.

1. Risk seeking:
The attitude of the individual is to gamble. the individual is said to be risk loving. The gamble has an uncertain outcome and individual wishes to take extra return due to high uncertainty.

2. Risk Neutral.

If the individual is indifferent between gamble or guaranteed outcome then he said to win a risk-neutral individual.

Here the Individual main focus is on the return. He will be willing to take more risk for more return.


3. Risk-Averse.
The individual chooses to have a guaranteed outcome. He does not want to take a chance of gambling at all.

Individuals are likely to shy away from risky investments for a lower but guaranteed return.


4. Risk tolerance.
It is the ability of the individual to take the risk. Higher the risk tolerance higher the ability to take a risk. It is negatively related to Risk Aversion.

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