RISK MANAGEMENT: REGULATORY EXPECTATION, RISK PERCEPTION, AND ORGANIZATIONAL INTEGRATION - Risk Management Applications in Pharmaceutical and Biopharmaceutical Manufacturing - page 63

TABLE 3.8 Loss Aversion and Status Quo Biases [31]
Bias Explanation

Loss aversion The potential for a loss is valued higher than a potential for

again

Certainty effect Much higher value is place on activities whose outcomes

are certain

Status quo bias Current state is preferred over change

Endowment/Ownership
effect

Ownership of an item, department, etc. increases the
perception of value to the owner

Regret avoidance Decisions that have the potential for a person to regret tend

to be avoided

Omission effect Exaggerated preference for inaction

Adapted from Viscusi (1996).

significant tendencies to steer clear of decisions that may create regrets (see
Table 3.8) .

3.3.2 Perception and Perspectivism

Perception in risk is also an application of the theory of perspectivism. Two
aspects of perspectivism are important to the application of risk management. The
first concept is there is no singular objective truth, just the observer's perspective
of that occurrence. The second is a conceptual framework that an absolute truth
may be obtained via an aggregate of different viewpoints or perspectives.
The use of multiple perspectives is seen in real-life applications of risk man-
agement through the selection of the individuals involved in the risk management
process. This group should generally encompass different functional areas such
that different views on a subject can be obtained. The goal is to create a much
more robust output from the risk process because, even with the best intentions,
a group approach can have issues with herd/groupthink biases.

3.3.3 Risk's Precautionary Principle

The precautionary principle is a risk approach that places the burden of proof
on the provider of the goods or services rather than society. It was developed
as an approach to manage uncertainty. The precautionary principle has partial
grounding in perspectivism as it tries to address issues where there may be no
objective truth available and strives to collect multiple viewpoints on a particular
risk. This thought process is evident in ICH Q9, which states:

Achieving a shared understanding of the application of risk management among
diverse stakeholders is difficult because each stakeholder might perceive different
potential harms, place a different probability on each harm occurring and attribute
different severities to each harm. In relation to pharmaceuticals, although there are