This is a fascinating term which I've learned about at some conferences. A loose translation of the term is this: What are the REAL chances of something bad happening?
I've heard it applied in two main areas -- terrorism and child abduction. Doing a rational risk assessment totally quantifies the ACTUAL risk of the typical person being affected by one of these things.
Here is a paper (PDF) on the the real threat of terrorism done by the Cato Institute.
One sentence that sticks out:
"Even with the September 11 attacks included in the count, the number of Americans killed by international terrorism since the late 1960s (when the State Department began counting) is about the same as the number of Americans killed over the same period by lightning, accident-causing deer or severe allergic reactions to peanuts."
Now, think about HOW MUCH MONEY we've spent "fighting" terrorism just since 9/11.
I'm going to try and find a rational risk assessment on child abductions.