By nature, humans have an innate tendency to expect the best out of a situation – a psychological phenomenon known as optimism bias. Optimism bias is defined as a bias that causes a person to believe that they are less at risk of experiencing a negative event compared to others. In the risk management world, this occurrence can affect people who analyze and report risk, which leads to inaccurate results within their risk assessments.

The presentation outlines the factors that lead to optimism bias, gives real-world examples of how optimism bias affects financial institution employees, and explains why it is important to understand the relationship between psychological human tendencies and risk assessments.