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Cognition : minding risks : why the study of behaviour is important for the insurance industry.

Weick, Mario and Hopthrow, Tim and Abrams, Dominic and Taylor-Gooby, Peter (2012) 'Cognition : minding risks : why the study of behaviour is important for the insurance industry.', Project Report. Lloyds, London.

Abstract

Risk identification is one of the keys to successful risk management, but we are not equally aware of all risks. Because the brain filters information, people make decisions based on a subset of the available evidence. This fundamental principle of cognition1 can cause problems in a context such as underwriting where subjective judgments are important.This report introduces insurers and financial decision makers to some fundamental principles of cognition that are important for risk management and discusses how human factors can affect risk perception. The report draws on various areas within psychology and related disciplines to highlight potential biases in risk perception. The report is a follow-up to the Lloyd’s Emerging Risks report “Behaviour: Bear, Bull or Lemming” published in 2010, which provides an overview of behavioural theory and discusses the benefits to insurance professionals of being aware of behavioural biases.

Item Type:Monograph (Project Report)
Full text:(VoR) Version of Record
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Status:Public
Publisher Web site:http://www.lloyds.com/emergingrisks
Date accepted:No date available
Date deposited:19 September 2018
Date of first online publication:December 2012
Date first made open access:No date available

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