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Business Economics - Risk, Uncertainty and Choice

In the real world, the consequences of any choice made by the consumer cannot be fully known before that choice is made, which means that the ideas of uncertainty and risk have to be examined.

Uncertainty refers to situations in which many outcomes of a particular choice are possible but the likelihood (or probability) of each outcome is unknown. Risk is rather different in that it can only be measured accurately on the assumption that we know all the possible outcomes and the likelihood (probability) of each outcome occurring.

Risk can be estimated in a variety of ways by assigning probabilities to various possible outcomes. Some examples of how to deal with risk and uncertainty are provided by the sites recommended in this and the next section.

Insurance Education Foundation

This site has a teacher and student section.Video clips and quizzes are available for students and lesson plans for teachers but also useful for students. A student work book is available as a downloadable pdf file which has information on insurance risk and terminology, together with exercises.

This is a user-friendly site with a good introduction to risk and insurance and has many links to other US sites.

Further Reference

Centre for Risk and Insurance Studies, University of Nottingham

Includes UK Insurance Company Statistics, which have been abstracted from the statistical report, UK Insurance Premiums 2000 (produced in conjunction with Thesys Information Ltd). Top insurance companies' worldwide total premium income from 1998/9 are also available.

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