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Describe the concept risk utility


Describe the concept risk utility



- An organization’s approach to risk management is driven by their risk utility or tolerance for risk
- Risk utility or risk tolerance is the amount of satisfaction or pleasure received from a potential payoff

Utility rises at a decreasing rate for a person who is risk-averse
Those who are risk-seeking have a higher tolerance for risk and their satisfaction increases when more payoff is at stake
The risk-neutral approach achieves a balance between risk and potential payoff

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francis1897 answered the question on March 14, 2023 at 09:08

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