Risk theory: From perception to cognition

This paper proposes a generic risk theory. The risk theory starts with a basic observation that risk is the product of a specific human cognitive process. This cognitive process is responsible for the generation and transformation of risk under different conditions. At the core of risk theory is a generic descriptive risk model. This risk model can be used to describe most risks seen in real life with a unified underlying logic. In the risk model, the human cognitive process of risk takes into account both the target value expectation and the realistic value expectation of cognitive subjects, and considers the disparity between them in terms of human values. Hence, risk in a variety of forms represents the disparity between the ideals of people and the cognitive reality of values. The risk model is quantitative. In the risk model, all elements from risk perception to risk cognition can be constructed quantitatively in terms of formal logic and probability. This renders most questions in the risk theory computational by nature. The model represents the cognitive disparity in terms the target value expectation and the realistic value expectation of the cognitive subject. Then the risk model is able to describe the necessary and sufficient conditions for the cognitive disparity to become perception.