A comparison of attitudes towards risk among business managers

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Abstract
This paper presents an experimental investigation of comparisons in attitudes towards risk between risk managers and non‐risk managers. The two groups of managers responded to a number of hypothetical business decisions and their risk‐taking attitude in each decision was measured by expressing the degree to which their actual choice differed from the expected monetary value as a fraction of the absolute value of the expected monetary value. Fifty per cent of the decisions involved a prospect of profit or break even, while the remainder held out only the prospect of a loss or no loss. A significant difference was detected in the attitudes of managers in each group. There was a great similarity in attitude over all subjects in those decisions involving profit but in potential loss‐producing problems the risk managers were considerably more risk averse. Rather than resulting in a contempt for loss the risk managers' familiarity with loss‐producing events would seem to have led them to a far higher degree of caution. The adaptability of non‐risk managers to the loss situation together with the methods of management education are both called into question by these findings.

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