Definition
Risk calculation is the discipline of separating a vivid hazard from a quantified one by computing, at least roughly, the product of exposure (how often you encounter the hazard), probability (how often the encounter leads to harm), and severity (how bad the harm is when it happens).
It is Rosling's corrective for the Fear Instinct — the tendency to over-weight hazards that are dramatic, novel, or recent and under-weight hazards that are mundane, familiar, or chronic.
Why it matters
How it works
Take a back-of-envelope example: should I worry about a shark attack? Exposure: a dozen swims a year. Probability per swim of an attack: vanishingly small. Severity if attacked: high. Product: still tiny. Compare with driving: exposure of thousands of trips a year, small but real probability per trip, severity moderate-to-high. Product: orders of magnitude larger.
The exercise reveals where attention should go. If two hazards differ by 1,000× in expected harm, the more dramatic one usually loses — but only after the multiplication is done. The Fear Instinct works the other way round: the more dramatic one wins until calculation intervenes.
A useful refinement is to break severity into its components — fatality rate, expected years of life lost, treatment cost, family impact. This matters when comparing very different hazards (a chronic condition vs. a rare accident) where 'severity' covers different downstream effects.