An integrated operation module for individual risk management
In this study, we used the cumulative prospect theory to propose the individual risk management process (IRM) which includes risk analysis and risk response stages. According to an individual's preferential structure, the process has been developed into an operational module which includes two sub-modules. From this, the individual's risk level for the confronted risk can be identified from the risk analysis, while the response strategies can be assessed at the risk response stage. Therefore, optimal response strategies can be recommended based on individual risk tolerance levels. The applicability of the proposed module is evaluated using an A-C court case. The results show that the proposed method can provide more useful and pertinent information than the traditional method of decision tree by using the expected monetary value (EMV).
IRM Preference structure Cumulative prospect theory Risk analysis Risk response
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