Perceived Risk Management

Abstract

The purpose of this paper is to contribute to the theoretical work on service-perceived risk management of knowledge-based services (i.e., intangible and heterogeneous) and experience-based services and to suggest a framework that helps to formalize these risks and the value associated with their management, by arguing that this risk management relies on a sequence of risks (Threat, Event, Ignorance and Damage, called the TEID model) and on three categories of control measures (preventative, detective and protective). By categorizing customer-perceived risks, and by integrating control measures and assurances into their offer, providers can design new and valuable services. Service value-chains involve various providers (implicitly or otherwise) who may engender annoyance and damages as risks are a sequence of events. This paper holds the potential to contribute to extending an understanding and management capacity of customer-perceived risks of knowledge-based services. It brings into play a new framework and new risk management process. It also helps with formalizing and making tangible customer added-value.