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Relative risk is commonly used to present the results of randomized controlled trials. [5] This can be problematic if the relative risk is presented without the absolute measures, such as absolute risk, or risk difference. [6]
The risk premium is used extensively in finance in areas such as asset pricing, portfolio allocation and risk management. [2] Two fundamental aspects of finance, being equity and debt instruments, require the use and interpretation of associated risk premiums with the inputs for each explained below:
Zero-risk bias is based on the way people feel better if a risk is eliminated instead of being merely mitigated. [2] Scientists identified a zero-risk bias in responses to a questionnaire about a hypothetical cleanup scenario involving two hazardous sites X and Y, with X causing 8 cases of cancer annually and Y causing 4 cases annually.
Tail risk, sometimes called "fat tail risk", is the financial risk of an asset or portfolio of assets moving more than three standard deviations from its current price, above the risk of a normal distribution.