Risk Management Approaches

This is a study where we attempt to explore different dimensions of risk that a consumer of any service or product may face over an interaction between the service / product vendor / provider and the consumer. Results are descriptive statistics based on findings of an empirical study. Different dimensions of these risk, which are defined in scientific literature provide different interaction effect at the point of decision making and service consumption. That is why it is important to understand their dynamics when service science is being explored.

So what are the different dimensions of risk, that we established after checking the wide repositories of scientific published literature?

  • Performance Risk: It is the possibility of the product or service malfunctioning and not performing as it was designed and advertised and thus failing to deliver the benefits as expected.
  • Financial Risk: It is the potential monetary loss outlay associated with the initial purchase price including the subsequent maintenance cost of the product. It also includes the recurring potential for a financial loss due to fraud.
  • Time Risk: Consumers may lose on time when making a bad purchase decision by wasting time in researching, understanding, comparing and analysing and finally making the purchase. It also includes the time wasted on learning how to use a product/service only to have to replace it if it does not perform to the consumers’ expectations.
  • Psychological Risk: The risk that an e-service may lower the consumers self image
  • Social & Cultural Risk: The risk that using a product/service may lead to embarrassment in one’s social group or in one’s beliefs.
  • Privacy & Information Security Risk: It includes risk associated with transaction security & privacy of data. It is the risk of loss of control over use of a consumer’s personal information and its usage without one’s knowledge or permission.
  • Physical Risk: It is the risk to the buyer’s or other’s safety in using products/service
  • Administrative Risk: Includes risks such as data modification, password sniffing, repudiation, and spoofing.
  • Policy (Law & order) Risk: Lack of strict regulation and legislation to avoid uncertainty.
  • Usage & Experience: It includes risk associated due to lack of prior experience with computer/ other internet devices, lack of experience with new technology and lack of banking experience.
  • Opportunism Risks: It is the risk associated with a lack of bargaining power.
  • Overall risk: It is a general measure of perceived risk when all facets are evaluated together.

An overview of the different risk dimensions are provided in the table added below:


A preliminary list risk facet parameters was initially developed after reviewing the literature. This procedure generated around 21 items; these were further consolidated to 11 parameters relevant to risks in e-payments and within the scope of to the current study. An English questionnaire was developed using Google forms which had basic demographic information questions about users there were individual questions on 11 risk parameters finalized based on “Likert” five point scale.

Various risk parameters were rated by the users on a licker scale of 1 to 5 for 1 being the lowest on risk and 5 being highest on risk. Based on the survey conducted below is the weighted risk value associated with various risk parameters of the study. Individual risk parameter weightage was calculated.  The Survey was reviewed by the project guide who is an expert in the e-commerce field; apart from this some expert advice was also taken from industrial experts to improve the form.

  1. Performance Risk: More than 56 % respondents rated performance risk on the higher side.
  2. Financial Risk: more than 57% respondents rated financial risk on higher side.
  3. Time Risk: 53% respondents rated time risk moderate to high, while 17 % rated it to be highest.
  4. Psychological Risk: 49 % respondents rated psychological risk on the lower side and another 18 % rated it as moderate risk.
  5. Social & Cultural Risk: More than 60 % respondents rated social & cultural risk on the lower side and another 22.5 % rated it as moderate risk.
  6. Privacy & Information Security Risk: 55 % respondents rated Privacy & Information security risk on the higher side and another 22.5 % rated it as moderate risk.
  7. Physical Risk: 41 % respondents rated Physical risk on the lower side and another 31 % rated it as moderate risk.
  8. Administrative Risk: 49 % respondents rated Administrative risk on the higher side and another 24 % rated it as moderate risk.
  9. Policy/Law & Order Risk: 55 % respondents rated Policy/Law and order risk on the higher side and another 25 % rated it as moderate risk.
  10. Usage & Experience Risk: Around 43 % respondents’ rated usage and experience risk on the higher side and another 30 % rated it as moderate risk.
  11. Opportunism Risk: Around 40 % respondents rated opportunism risk on the higher side and another 25 % rated it as moderate risk.
  12. Overall Risk: Around 30% respondents rated Overall risk on the lower side and another 62 % rated it as moderate to high risk.

Download the Key Findings of Data Analysis

  • Approximately 65 % respondents of the survey did online shopping once in a month or more. With less that 2 % respondents who did not shop online.
  • Around 40 % of the respondents of the survey had done online shopping on 3-5 different websites/apps with 50 % respondents having online shopping experience on more than 6 portals.
  • 76 % of the respondents proffered Credit Cards/Debit Cards for online payments and 66% preferred Net Banking as compared to 44 % preferring Cash on Delivery (COD) facility. Mobile Wallets and other similar apps are also becoming popular in India with 24% respondents preferring wallets as well
  • Around 47 % of the respondents of the survey had 3-5 internet connected devices per family with 35 % respondents having more than 6 devices per home.
  • Around 88 % respondents of the survey highly educated i.e. Graduate & above.
  • 20 % respondents of the survey had monthly income less than 10,000 INR while 52 % had monthly income above 50,000 INR
  • 7 percent respondents of the survey were less than 20 years of age, around 73 % in the age group of 21 to 30 and another 18 percent above 31 years of age.


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