Module 3 - Only Self Assesment Issues

Question 0

Herbert Simon approach to decision making involves what steps

Answer 0

Intelligence (is there a problem)
Design (what are the alternatives)
Choice
Implementation

Question 1

Classical decision theory makes what assumptions

Answer 1

Decision makers are objective
Have complete information
Consider all possible alternatives

Question 2

Define bounded rationality

Answer 2

Individuals make decisions by coati ting simple models that extract the essential features from problems without capturing all their complexity

Question 3

Types of decision theory

Answer 3

Normative - how decisions should be made
Descriptive - how people actually make decisions
Prescriptive - how decisions should be made in realistic settings

Question 4

Define personality

Answer 4

Those relatively stable and enduring aspects of individuals that distinguish them from other people, making them unique, but which at the same time allow people to be compared to each other.

Question 5

Personality can be described by 5 broard factors

Answer 5

Extroversion
Agreeableness
Conscientiousness
Emotional stability
Openness

Question 6

Define the 3 risk attitudes

Answer 6

Risk adverse

Risk neutral - reacts in line withy the risk probability

Risk seeking

Question 7

Risk belief define

Answer 7

The psychological state in which an individual is convinced of the truth of a proposition

Question 8

Describe the perception process

Answer 8

Stimulus
Selective attention (reduce information)
Perceptual organisation (classify or group similar stimuli together)
Response

Question 9

Define closure in terms if perception

Answer 9

Closures is when we fill in the gaps for incomplete or ambiguous information

Question 10

Define judgement

Answer 10

The cognitive process of reaching a decision or drawing conclusions

Question 11

Define heuristic

Answer 11

A rule of thumb strategy intended to increase the chances of quickly solving a problem

Question 12

Define 5 types of heuristic

Answer 12

Anchor and adjustment - judgement made from an initial value (anchor)

Availability - base judgements of probability on the basis of information that is readily available

Related representative - base judgement in things that are familiar

Overconfidence

Framing

Question 13

Define three effects of heuristics

Answer 13

Recent events get more weight

Events that aren’t understood are viewed as more concerning

Close events viewed as more worrying than far off events

Question 14

Define 3 individual predictors of risk behaviour

Answer 14

Risk preferences
Risk perceptions
Risk propensity

Question 15

Define 4 characteristics of organisational risk behaviour

Answer 15

Group composition
Cultural risk values
Leader risk orientation
Organisational control systems

Question 16

Define 2 characteristics of problem solving risk behaviour

Answer 16

Probably familiarity
Problem framing (in what context is the problem given)

Question 17

Define risk propensity

Answer 17

The general likelihood of a person behaving in a more or less risky way

Question 18

Define risk perception

Answer 18

Risk perception describes the way in which a stakeholder views a risk based upon a set of values or concerns.

Question 19

Discuss the 1 extremes of the risk philosophy line

Answer 19

“Techno scientific” sees risk as an objective phenom omen and undertake rational approaches e.g. Measurement and calculation.

Relativist sees risk as a social / psychological construction

Question 20

Define the 3 types of business model for firms engaged in risk management

Answer 20

The pure risk control model
The efficiency replacement model
The risk transformation model

Question 21

Defined business risk culture

Answer 21

The shared way of thinking and acting on perceived organisational risks

Question 22

Three methods for deriving probabilities

Answer 22

A priori
Relative frequency
Subjective

Question 23

Define 2 types of people involves with risk

Answer 23

Organisers - more control is better

Behaviourists - continuously trying to increase control is self defeating

Question 24

Define the standard risk management process (RMP)

Answer 24

Set goals and establish content
Identify risks
Analyse risks
Evaluate risks
Treat risks

Question 25

Define the main factors when describing a risk

Answer 25

Name of risk
Scope of risk
Nature of risk (strategic , operational etc.
Stakeholders

Question 26

Distinguish between estimation and valuation and measurement and analysis

Answer 26

Estimation and evaluation are qualitative

Measurement and analysis are quantitative

Question 27

Describe the Delphi method

Answer 27

Experts are taken through a process of considering an issue, commenting on that issue, reviewing and reacting to the comments of other experts and revising to a final view