The relationship between risk perception and risk management: a systematic literature review

Risk perception plays an important role in risk management and risk reduction because it involves understanding risk exposures that can affect the stability and sustainability of both financial and non-financial institutions. This study aims to highlight the relationship between risk perception and risk management in various disciplines, as well as identify the factors that could influence risk perception and risk management. Employing a systematic literature review (SLR) methodology, this study adheres to the Preferred Reporting Items for Systematic and Meta-Analyses (PRISMA) guidelines to ensure the production of high-quality evidence. The review identified 2333 unique articles, 18 of which met the inclusion criteria, from online databases such as Web of Sciences, Scopus, ScienceDirect, Sage, and Wiley, spanning publications from 2007 to 2022. The majority of the reviewed articles indicate a positive correlation between risk perception and risk management. Research specifically revealed that a high level of risk perception correlates with higher adherence to risk management strategies. However, the relationship between risk perception and risk management under uncertainty raised by political conflict, especially in the banking sector, remains unexplored, highlighting the need for further investigation into the varying types of risk and factors that influence how individuals perceive and manage risk in financial institutions.