According to the International Labour Organization (ILO) Encyclopaedia of Occupational Health & Safety, a risk acceptance decision refers to the actions taken by executive management that result in an outcome in which the benefits outweigh the costs of the decision. The purpose of a risk acceptance decision is not to eliminate risks but to contain risks in a way that it is considered acceptable by the organization.Continue Reading
A risk acceptance decision sometimes requires several people in an organization to collaborate. Similarly, risk acceptance decisions can be made by a person in situations that involve automatic decision making or habitual behavior. In both cases, the decisions are evaluated according to their relative benefits and costs. The executive manager of an organization determines the parameters used in the risk assessment process and the levels of risk that are considered acceptable.
Risk acceptance decisions are affected by four factors: individual perception, time, space and context of behavior. All of these factors affect the extent to which someone perceives a situation as a risk and whether or not taking action is necessary to mitigate the identified risk. According the ILO, a person is more likely to accept dangers in order to gain benefits when they perceive themselves as having sufficient control over the hazards in the situation.Learn more about Financial Calculations