A-Z Popular Blog Risk Search »
Key Concepts
Risk Management

Related Topics
Risk Treatment

Risk Analysis

Risk Identification

9 Examples of Risk Aversion

 , updated on December 06, 2023
Risk aversion is a low tolerance for risk taking. Risk is a probability of a loss. Generally speaking, risk surrounds all action and inaction and can't be completely avoided. Risk aversion is a type of behavior that seeks to avoid risk or to minimize it. The following are illustrative examples.

Loss Aversion

A preference for situations where losses are unlikely. For example, a federally insured savings account as opposed to stocks and bonds that can fluctuate in value. This may neglect the risk of inflation as an interest rate in a guaranteed savings account is often less than the inflation rate.

Uncertainty Avoidance

Uncertainty is the cause of all risk. In other words, if you could predict the future with certainty you would never choose a path that leads to failure. As such, risk aversion is associated with a preference with choices that are familiar, known and well-documented. For example, risk-adverse customers may have a preference for products that are marketed with in-depth information including details of design, construction, functionality, performance, specifications and customer support.

Resistance to Change

A preference for stability that manifests as resistance to changes that are perceived as a threat to the status quo. For example, risk-adverse employees may attempt to derail a project that will dramatically change processes, procedures and tools.


A preference for incremental change such as continuous improvement. Risk-adverse individuals prefer a slow and steady pace of change with much planning and testing such that nothing is likely to go wrong. This can neglect risks related to being too cautious such as competitive risks in an industry that is rapidly changing.


Generally speaking, optimism is associated with risk taking and pessimism with risk-aversion. This is because a pessimist will generally estimate higher risk probabilities than an optimist. Where a pessimist sees a 70% chance of failure, an optimist may see a 5% chance.


Defeatism is when pessimism becomes a performance problem such that an individual doesn't exert effort and care in their work because they feel failure is inevitable. Risk-adverse individuals may have low motivation in an environment of aggressive risk taking as they feel that strategy is reckless and failures too frequent.


Risk aversion can manifest itself as needless complexity. For example, risk-adverse individuals may consider low probability or low impact risks in their decision making processes that lead to a process of overthinking.

Minimax Criterion

A minimax criterion is the choice from a set of options that minimizes the chance of a high impact risk. For example, a risk-adverse individual may buy a more expensive airline ticket on an airline or aircraft they perceive as safer.


Aversion to the risk of criticism or failure can drive an individual to perfect their work. This can be expensive as the pareto principle suggests that 80% of value is created within the first 20% of effort. For example, a project manager may be able to come up with a reasonable project plan in 2 days and a somewhat better project plan in 20 days.


The following is a basic overview of risk aversion with additional examples.
Overview: Risk Aversion
Related Concepts
Next: Risk Tolerance

Risk Management

This is the complete list of articles we have written about risk management.
Acceptable Risk
Business As Usual
Business Impact
Business Risks
Calculated Risk
Cascading Failure
Contingency Plan
Contingency Planning
Disaster Preparedness
Dread Risks
Economic Risk
Financial Risk
Innovation Risk
Investing Risk
Moment Of Risk
Plan Template
Political Risk
Positive Risk
Project Risk
Reputational Risk
Residual Risk
Resource Risk
Risk Acceptance
Risk Analysis
Risk Appetite
Risk Awareness
Risk Capacity
Risk Communication
Risk Contingency
Risk Control
Risk Culture
Risk Estimates
Risk Evaluation
Risk Exposure
Risk Impact
Risk Intelligence
Risk Management
Risk Matrix
Risk Measurement
Risk Mitigation
Risk Monitoring
Risk Objectives
Risk Prevention
Risk Probability
Risk Profile
Risk Reduction
Risk Register
Risk Response
Risk Sharing
Risk Taking
Risk Tolerance
Risk Treatment
Risk Trigger
Risk-Reward Ratio
Seasonal Risk
Secondary Risk
Special Risks
Strategy Risk
Tactical Risk
Technology Risk
Unknown Risks
Upside Risk
More ...
If you enjoyed this page, please consider bookmarking Simplicable.


An extensive list of risks and risk management techniques.

Relative Risk

How to calculate relative risk with examples.

Career Risk

The common types of career risk.


The definition of angst with examples.


The definition of systemic with examples.


The definition of failure with examples.

Pure Risk

The definition of pure risk with examples.

Speculative Risk

The definition of speculative risk with examples.

Personal Risk

The definition of personal risk with examples.

Risk Management

An overview of the risk management process.

Business Risk Management

An overview of common business risk management techniques.

Disaster Preparedness

The definition of disaster preparedness with examples.

Risk Prevention

The definition of risk prevention with examples.

Err On The Side Of Caution

The definition of err on the side of caution with examples.

Risk Appetite

The common types of risk appetite.

Risk Awareness

The common types of risk awareness.

Risk Culture

An overview of the common types of risk culture.

Contingency Plan

An overview of contingency plans with complete examples.

Enterprise Risk Management

A complete overview of enterprise risk management with examples.
The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map