Risk

In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans improvement such as health, well-being, wealth, property or the environment, often focusing on negative, undesirable consequences. numerous different definitions hit been proposed. The international standards definition of risk for common apprehension in different application is “effect of uncertainty on objectives”.

The apprehension of risk, the methods of assessment & management, the descriptions of risk and even the definitions of risk differ in different practice areas business, economics, environment, finance, information technology, health, insurance, safety, security etc. This article ensures links to more detailed articles on these areas. The international specifics for risk management, ISO 31000, enable principles and generic guidelines on managing risks faced by organizations.

Definitions of risk

The Oxford English Dictionary OED cites the earliest use of the word in English in the spelling of risque from its French original, 'risque' as of 1621, and the spelling as risk from 1655. While including several other definitions, the OED 3rd edition defines risk as:

Exposure to the opportunity of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such(a) a possibility.

The Cambridge modern Learner’s Dictionary gives a simple summary, determine risk as “the opportunity of something bad happening”.

The International organization for Standardization ISO support 73 provides basic vocabulary to setting common understanding on risk supervision concepts and terms across different applications. ISO guide 73:2009 defines risk as:

effect of uncertainty on objectives

Note 1: An issue is a deviation from the expected – positive or negative.

Note 2: Objectives can relieve oneself different aspects such(a) as financial, health and safety, and environmental goals and can apply at different levels such(a) as strategic, organization-wide, project, product and process.

Note 3: Risk is often characterized by acknowledgment to potential events and consequences or a combination of these.

Note 4: Risk is often expressed in terms of a combination of the consequences of an event including turn in circumstances and the associated likelihood of occurrence.

Note 5: Uncertainty is the state, even partial, of deficiency of information related to, understanding or knowledge of, an event, its consequence, or likelihood.

This definition was developed by an international committee representing over 30 countries and is based on the input of several thousand listed matter experts. It was first adopted in 2002. Its complexity reflects the difficulty of satisfying fields that ownership the term risk in different ways. Some restrict the term to negative impacts “downside risks”, while others add positive impacts “upside risks”.

ISO 31000:2018 “Risk management — Guidelines” uses the same definition with a simpler kind of notes.

Many other definitions of risk make-up been influential:

Some resolve these differences by arguing that the definition of risk is subjective. For example:

No definition is sophisticated as the correct one, because there is no one definition that is suitable for all problems. Rather, the alternative of definition is a political one, expressing someone’s views regarding the importance of different adverse effects in a particular situation.

The Society for Risk Analysis concludes that “experience has made that to agree on one unified classification of definitions is not realistic”. The sum is “to permit for different perspectives on fundamental picture and make a distinction between overall qualitative definitions and their associated measurements.”