Five "Neglects" in Risk Management
1. Probability neglect – people sometimes don’t consider the probability of the occurrence of an outcome, but focus on the consequences only.
2. Consequence neglect – just like probability neglect, sometimes individuals neglect the magnitude of outcomes.
3. Statistical neglect – instead of subjectively assessing small probabilities and continuously updating them, people choose to use rules-of-thumb (if any heuristics), which can introduce systematic biases in their decisions.
4. Solution neglect – choosing an optimal solution is not possible when one fails to consider all of the solutions.
5. External risk neglect – in making decisions, individuals or groups often consider the cost/benefits of decisions only for themselves, without including externalities, sometimes leading to significant negative outcomes for others.
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