Review article
Risk modification on the part of managers
Perica Vojinić
Abstract
The paper aims to determine how and how often Croatian managers modify the risk in business
situations. The paper includes results of a survey conducted among the sample of managers employed
at middle and senior management levels in Croatian companies. The sample consists of 81 managers.
Descriptive statistics was used in the process. The hypothesis that managers are more prone to modify
the risk than to make a simple choice between a safe or a risky alternative was confirmed. The results
of a one-way analysis of variance suggest that there is a connection between a manager’s risk preferences
and risk modification preferences. As expected, managers who choose risky alternatives are
those who are likely to take a risk; managers undertaking a safe action are the least likely to take a risk,
whereas those who modify risk are moderately risk prone. Methods of descriptive statistics were used
to analyse the applicability of the prospect theory in local environment. The results suggest that Croatian
managers in the hotel industry behave according to behaviour patterns advocated by the prospect
theory. Namely, managers avoid risk in the gain domain, whereas they accept it in the loss domain.
Keywords
risk modification; risk prone; prospect theory
Hrčak ID:
94876
URI
Publication date:
3.12.2012.
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