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How Well do Your Employees Evaluate Risk?

In a recent column in Human Resource Executive, Carol Harnett reminds us that humans are notoriously poor at evaluating risk. We don’t always focus on the major problem, or weigh compromising factors correctly. Quoting risk-communications consultant Peter Sandman, Harnett suggests that risk should be evaluated using this formula: Risk = Hazard + Outrage.What does that mean? Hazard is the anticipated annual mortality rate, and all other factors fall under outrage. “The public,” says Sandman, “pays too little attention to hazard; the experts pay absolutely no attention to outrage. Not surprisingly, they rank risks differently.” Consequently, experts and the public choose insurance differently too.