Adaptive risk assessment: How massive disruption moderates risk propensity and organisational risk management strategies—lessons from COVID-19

Firms reformulated their risk management strategies after COVID-19. This study examines how the perceived scale of disruption and decision-maker risk propensity influence investments in proactive and reactive risk management. Surveyed managers show that a higher perceived COVID-19 impact significantly increased adoption of risk management strategies, with individuals of low risk propensity more likely to implement them. Decision makers with high risk propensity engaged in adaptive risk assessments during large and prolonged crises, dynamically updating perceived disruption probabilities and substantially increasing risk management investments compared to low risk propensity counterparts. These findings emphasize the importance of organizations to adopt dynamic risk assessment tools that accommodate changing circumstances and to cultivate leadership cultures embracing diverse risk attitudes.