Perspective chapter: the audacity of risk – contemporary failures

Abstract

In Modern society, risk is a complicated concept often taken for granted, and measured, calculated and predicted as a surety in most instances using mathematical and calculative analysis as concrete affirmation of market behavior. While this approach to risk is widely used and accepted as a premise to market assertion, it does not incorporate some of the facets crucial to understanding risk. The focus of contemporary risk management, especially for financial houses, in which some of the biggest culprits are banks, is on measuring and predicting risk rather than understanding this evolving concept. This chapter delves into the social aspects of risk that are usually ignored and presents some of the demits of banking and other financial institutions that plague a heavily calculative approach to risk. Our research on which this chapter is based has found that this measurable and calculative approach to risk has impaired the ability of risk to be explored in other dimensions. For example, the concept of risk, if better understood before being measured, can possibly lead to better decision making both at the micro and macro level of operations that can eventually result in a more stable, robust financial system.