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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
Insight
The central insight in the methodology for incorporating economic risks arise from the realization of the fact that however manifold and diverse might be the causes, or factors, of risks around a specific project or business (for instance, the hike in the price for raw materials, the lapsing of deadlines for construction of a new operating facility, disruptions in a production process, emergence of a serious competitor on the market, the loss of key personnel, the change of a political regime, natural contingencies, etc.), all of these are ultimately manifested under only two guises. According to CCF Conception the economic risk consists in that: '''''Actual positive conventional cash flows (income, inflows) turn out to be less than expected AND / OR Actual negative conventional cash flows (expenditures, outflows) turn out to be larger than expected (in absolute terms)'''''.Such lucid and unambiguous conceptual treatment of such a complex and multi-faceted notion as the economic risk emphasizes the very core of the question. The '''''economic risk is not an abstract ‘uncertainty’ or ‘possibility of failure’ or changeableness (variability) of the outcome… The economic risk – is a monetary amount which might be under-collected and/or over-paid.''''' Just as in music, one must use musical notes and staves—not alphabet letters or colors—to render a melody, in describing economic risk, we must ultimately operate with monetary units and not with the percentages of discount rates, magnitudes of volatility or anything else.
(See .)