Assessing risk perception by means of ordinal models
Paola Cerchiello, Maria Iannario, and Domenico PiccoloAbstract.This paper presents a discrete mixture model as a suitable approach for the anal-
ysis of data concerning risk perception, when they are expressed by means of ordered scores
(ratings). The model, which is the result of a personalfeeling(risk perception)towards the
object and an inherentuncertaintyin the choice of the ordinal value of responses, reduces the
collective information, synthesising different risk dimensions related to a preselected domain.
After a brief introduction to risk management, the presentation of theCUBmodel and related
inferential issues, we illustrate a case study concerning risk perception for the workers of a
printing press factory.Key words:risk perception,CUBmodels, ordinal data1 Introduction
During the past quarter-century, researchers have been intensively studying risk from
many perspectives. The field of risk analysis has rapidly grown, focusing on issues of
risk assessment and risk management. The former involves the identification, quan-
tification and characterisation of threats faced in fields ranging from human health
to the environment through a variety of daily-life activities (i.e., bank, insurance, IT-
intensive society, etc.). Meanwhile, risk management focuses on processes of com-
munication, mitigation and decision making. In normal usage, the notion of “risk”
has negative connotations and involves involuntary and random aspects. Moreover,
the conceptual analysis of the risk concept wavers from a purely statistical definition
(objective) to a notion based on the mind’s representation (subjective). In this con-
text, perception of risk plays a prominent role in people’s decision processes, in the
sense that different behaviours depend on distinct risk perception evaluation. Both
individual and group differences have been shown to be associated with differences
in perceptions of the relative risk of choice options, rather than with differences in
attitude towards (perceived) risk, i.e., a tendency to approach or to avoid options
perceived as riskier [23, 24]. Risk is subjectively defined by individuals and is in-
fluenced by a wide array of psychological, social, institutional and cultural factorsM. Corazza et al. (eds.), Mathematical and Statistical Methodsfor Actuarial Sciencesand Finance
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