Risk Perceived

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Risk Perceived is the risk a person sees in a course of action being considered - how risky the action feels to them.

Risk perceptions can change, sometimes dramatically, and these changes may not be rational. When investment markets are booming people tend to under-estimate the level of risk and when markets are falling people tend to over-estimate the risk - though, objectively, booming markets are usually riskier than falling markets.

Other risk-related constructs include Risk Tolerance, Risk Capacity and Risk Required. See Balancing Risk about how to deal with all four risk constructs.

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