Behavioural Risk Management
First published:
ISBN: 9781782724230
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Appendix: Selective list of Behavioural Biases
Preface
An Introduction to Behavioural Risk Management
Risk Management Context
Value-at-Risk as the Dominant Risk Management Tool in the Financial Industry
Case Studies on Risk Management Failure
The Role of Regulation in Risk Management
Advances in Behavioural Economics and Finance
Behavioural Issues with Probability
Systems Theory
Using Scenarios
Making Robust Decisions
Advances in the Risk Management Process
Behavioural Risk Management in the Financial Markets
Countervailing Power
Behavioural Risk Management: Closing Thoughts
Appendix: Selective list of Behavioural Biases
Bibliography
| Bias | Explanation |
| Ambiguity aversion | Phenomenon that people avoid situations with uncertainties |
| Anchoring | Effect that an initial piece of information serves as a reference point, even when it is irrelevant |
| Attribution bias | Effect that one attributes occurrence of events to skill rather than luck |
| Attribution error | Effect that success is attributed to skill and failure to occurrence of bad luck and external circumstances |
| Availability bias | Effect that recent events weigh more heavily in our assessments of probability |
| Base rate fallacy | Tendency to ignore general information when assessing a specific case |
| Causality trap | Incorrect belief that when two events occur simultaneously, that one event must cause the other |
| Cognitive dissonance | Psychological effect when new observations contradict earlier beliefs or thoughts |
| Collective rationalisation | Subconsciously providing evidence and rationale for a decision by the group |
| Confirmation bias | Effect that one will value information that confirms one’s belief much more than information disconfirming one’s belief |
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