Discuss the four types of informational processing errors.

Select three of the following risk categories. Provide definitions and examples.

• Strategic Risks
• Insurance Risks

Types of Information Processing Errors

In processing information, errors do arise and they include the following:

1. Mental accounting

As an information processing error, mental accounting refers to the different values that are generated due to the criteria used in the calculation (Lin 2018). Processing information based on mental accounting is a significant challenge since the outcome becomes a threat to what is regarded as ideal and quality. Necessarily, the focus and key integrations in processing information rely on mental accounting. The error comes as a result of imagination or treating the data based on a virtual concept instead of working out to solve considerable amounts of effective and quality protocols regarding the same (Lin 2018).

2. Emotional gap

An emotional gap is a processing error that occurs when the role of emotions in influencing the decisions is not taken into accountability (Lin 2018). The success of a qualitative analysis depends on the nature and effective processes of change implemented in the course of making conclusions. Emotional gaps result in assumptions and other challenges that need to be mitigated or eliminated in the best ways possible to ensure that a crucial strategy is implemented (Lin 2018). Emotional gaps are one of the difficult aspects of information processing since the assumptions are having a greater effect on the outcome of the various entities in place.

3. Availability

An error occurs in the availability aspect due to the challenge of deficiency of what is considered an adequate amount of information (Lin 2018). The available information or examples in someone’s mind determines the nature of processing and the conclusions associated with the various aspects of data. Qualitatively, the need to focus on key metrics and integrated solutions rely effectively on the things that matter for the right solutions to be implemented.

4. Framing

A framing error occurs when how the information is put becomes distorted or biased. The main challenge is having information that is not well-organized (Lin 2018). Framing of the data is important in coming up with what is considered ideal information, especially with a focused entity and implementation of the right strategies. The main focus is enhancing the ideals of information processing which is supposed to follow a logical process.

Risks

Strategic risks

Strategic risks are operational risks and decisions that are made to accomplish the various deliverables or objectives of companies. An example of strategic risk is on change of operating hours to accomplish the various objectives. 

Insurance risks

Insurance risks are types of risks that can be cushioned through insurance policies. The risks include accidents, natural calamities, and other challenges that can impact a business. Insurance risks are claimed from the insurance companies in case they occur. A significant risk management strategy is implemented in making such risks reduced significantly and reduce the challenges associated with the same.

Market Risks

Market risks are uncertainties in business especially in the marketing sector (Komarek, De Pinto & Smith, 2020). The fact that a significant loss can be incurred is enough motivation regarding the risks. The main challenges entail working through a comprehensive measure to work on the market-based solutions. Market risks include lack of customers, fluctuating prices, and government controls. The risks are significant and worth controlling due to the challenges and other aspects in place.