Risk is the possibility or chance that something bad or undesirable may happen, involving uncertainty about the effects or consequences of an activity or decision with respect to something humans value, such as health, wealth, property, or the environment
. It can be understood as the effect of uncertainty on objectives, which may include both negative outcomes (threats) and positive outcomes (opportunities)
. In more specific terms:
- Risk is often described as a combination of three elements: what can happen (scenario), how likely it is to happen (probability), and what the consequences would be if it does happen
- It can be expressed as the probability that a hazard (a source of harm) may cause injury or loss
- In finance, risk refers to the chance that actual investment results will differ from expected results, potentially causing financial loss
- Risk management involves identifying, assessing, and controlling risks to reduce or mitigate their negative impacts while sometimes also leveraging potential opportunities
Overall, risk involves uncertainty and the potential for loss or harm, and it is assessed and managed differently depending on the context, such as health, business, environment, or finance
