Risk

Definitions of Risk

• Risk is the possibility of something bad happening.
• Risk involves uncertainty about the effects/implications of an activity.
• The international standard definition of risk is the effect of uncertainty on objectives.
• Risk can be characterized by potential events and consequences.
• Risk is often expressed in terms of the combination of consequences and likelihood of occurrence.
• The earliest use of the word risk in English dates back to 1621.
• The Oxford English Dictionary defines risk as the possibility of loss, injury, or other adverse circumstances.
• The Cambridge Advanced Learners Dictionary defines risk as the possibility of something bad happening.
• The ISO Guide 73 defines risk as the effect of uncertainty on objectives.
• Risk can be a deviation from the expected, either positive or negative.
• Objectives can have different aspects and apply at different levels.
• Uncertainty refers to the deficiency of information related to an event, its consequence, or likelihood.
• Risk was originally used as a synonym for hazard, meaning a potential source of harm.
• Risk can be defined as the chance of harm or the probability of unwanted events.
• Risk is linked to uncertainty, which is a broader term than chance or probability.
• Risk can be seen as measurable uncertainty, applicable to both positive and negative outcomes.
• In finance, risk is often equated to the volatility of return.

Practice Areas

• The understanding, management, and measurement of risk differ across different practice areas.
• Business risks arise from uncertainty about the profit of a commercial business.
• Business risks can be controlled through risk management techniques.
• Enterprise risk management includes methods and processes to manage risks and seize opportunities.
• Risk management practices vary in different industries and sectors.

Economic Risk

• Economic risk arises from uncertainty about economic outcomes.
• Examples of economic risk include exchange rate fluctuations, government regulation, and political stability.
• Risk in economics is often defined as quantifiable uncertainty about gains and losses.
• Economic risk can affect investments and a company's prospects.
• Macroeconomic conditions can impact economic risk.

Environmental Risk

• Environmental risk arises from environmental hazards and issues.
• Risk in the environmental context refers to the chance of harmful effects to human health or ecological systems.
• Environmental risk assessment aims to assess the effects of stressors, such as chemicals, on the local environment.
• Environmental risk is an important consideration in public health and policy decisions.
• Environmental risk can have long-term impacts on human health and the environment.

Financial Risk

• Financial risk arises from uncertainty about financial returns.
• It includes market risk, credit risk, liquidity risk, and operational risk.
• Risk in finance is the possibility that the actual return on an investment will be different from its expected return.
• Financial risk modeling measures the aggregate risk in a financial portfolio.
• Investments with greater inherent risk often promise higher expected returns.

Health Risk

• Health risks arise from disease and other biological hazards.
• Epidemiology is the study and analysis of the distribution, patterns, and determinants of health and disease.
• Risk assessment in public health characterizes the nature and likelihood of harmful effects to individuals or populations.
• Health risk assessment can be qualitative or include statistical estimates of probabilities.
• Health risk assessments provide individuals with an evaluation of their health risks and quality of life.

Health, Safety, and Environment Risks

• Health, safety, and environment (HSE) risks are often linked due to organizational management structures.
• A single risk event may have impacts in all three areas over differing timescales.
• Examples include the release of radiation or toxic chemicals, which can have immediate safety consequences, long-term health impacts, and lasting environmental impacts.
• HSE risks require comprehensive management and mitigation strategies.
• Events like Chernobyl highlight the interconnectedness of health, safety, and environment risks.

Risk Management

• Risk management is a systematic approach to managing risks.
• It consists of coordinated activities to direct and control an organization with regard to risk.
• ISO 31000 is the international standard for risk management.
• The risk management process includes communicating and consulting.
• It also involves establishing the scope, context, and criteria.

Risk Assessment

• Risk assessment is a systematic approach to recognizing and characterizing risks.
• It involves evaluating the significance of risks to support decision-making.
• Risk assessment can be qualitative, semi-quantitative, or quantitative.
• Qualitative approaches rely on judgment to evaluate the significance of risks.
• Semi-quantitative approaches use numerical rating scales and risk matrices.

Risk Identification

• Risk identification is the process of finding, recognizing, and recording risks.
• It involves identifying risk sources, events, causes, and potential consequences.
• ISO 31000 describes it as the first step in a risk assessment process.
• Different methods for identifying risks include checklists, evidence-based methods, and team-based methods.
• Techniques like scenario analysis and expert-elicitation methods can also be used for risk identification.

Risk Analysis

• Risk analysis is about developing an understanding of the risk.
• It helps comprehend the nature of risk and determine the level of risk.
• In the ISO 31000 risk assessment process, risk analysis follows risk identification.
• It precedes risk evaluation.
• Risk analysis can involve various techniques such as quantitative risk assessment and probabilistic risk assessment.

Risk Treatment

• Risk treatment involves selecting and implementing options for addressing risk.
• It aims to reduce or prevent risks in contexts where risks are harmful.
• In the safety field, risk treatment aims to protect employees, the general public, the environment, and company assets.
• Risk treatment is also about identifying opportunities and achieving a balance between innovation and avoiding crises.
• It plays a role in setting strategy, achieving objectives, and making informed decisions.

Risk Mentions

Risk Data Sources