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Risk
Definitions of riskHistorical backgroundRisk vs. uncertaintyInsurance and health riskInsightIn businessRisk sensitive industriesIn public worksRegretFramingFear as intuitive risk assessmentRisk assessment and management
Definitions of riskHistorical backgroundRisk vs. uncertaintyInsurance and health riskInsightIn businessRisk sensitive industriesIn public worksRegretFramingFear as intuitive risk assessmentRisk assessment and management
Definitions of risk
There are many definitions of ''risk'' that vary by specific application and situational context. Risk is described both qualitatively and quantitatively.Qualitatively, risk is proportional to both the expected losses which may be caused by an event and to the probability of this event. Greater loss and greater event likelihood result in a greater overall risk.
Frequently in the subject matter literature, ''risk'' is defined in pseudo-formal forms where the components of the definition are vague
and ill-defined, for example, ''risk'' is considered as an indicator of , or depends on threats, vulnerability, impact and uncertainty.
Measuring engineering risk is often difficult, especially in potentially dangerous industries such as nuclear energy. Often, the probability of a negative event is estimated by using the frequency of past similar events or by event-tree methods, but probabilities for rare failures may be difficult to estimate if an event tree cannot be formulated. Methods to calculate the cost of the loss of human life vary depending on the purpose of the calculation. Specific methods include what people are willing to pay to insure against death, and radiological release (e.g., GBq of radio-iodine).
There are many formal methods used to assess or to "measure" risk, considered as one of the critical indicators important for human decision making.
Financial risk is often defined as the unexpected variability or volatility of returns and thus includes both potential worse-than-expected as well as better-than-expected returns. References to negative risk below should be read as applying to positive impacts or opportunity (e.g., for "loss" read "loss or gain") unless the context precludes.
In statistics, risk is often mapped to the probability of some event which is seen as undesirable. Usually, the probability of that event and some assessment of its expected harm must be combined into a believable scenario (an outcome), which combines the set of risk, regret and reward probabilities into an expected value for that outcome. (See also Expected utility.)