DEFINING RISK

DEFINING RISK

Understanding risk begins with the?definition of risk.

Let us take a look.

Risk is known popularly as the probability of suffering loss. This has been reckoned as a life management idea. Both in business and personal life we try to avoid this loss.

Dictionaries agree with this definition.

The definition was extended soon. Risk the probability of suffering loss while pursuing a gain. No one embraces risk without promised gain. To take the risk or not depends on the amount of gain dangling in front. The ratio must compel one to go ahead.

?A professional definition emerged lately.

Risk is defined as the effect of uncertainty on objectives.

Risk is seen as a shadow of objectives. Risk is defined in the context of objectives. Without objectives there is no risk to talk about.

Also in the past people hurriedly and, without much reflection, related risk to loss. In the modern definition risk is related to uncertainty.

The modern definition is more brief, authentic and sophisticated.

Uncertainty in the case of asset management - both physical and financial assets -?translates into variation in performance. The term “objective”, heavily stressed in the definition, here means functionality of the asset. People would rather refer to functions of an asset instead of objectives. People swallow the risk of variation in order to enjoy benefits from assets. Risk mitigation here means the good old variation reduction.

Business houses take risks while seizing market opportunities. The objective here is growth. Risk is market uncertainty, which goes in many names, for example volatility and intangibility. Lack of knowledge and foresight breeds risks.

To maximize human performance is a common goal in most institutions, social as well as business. Uncertainty in human behavior is a risk in such cases. Unpredictability and huge variation in character affect performance. In the extreme, they result in threats to safety and security, far more serious than missed objectives.

Limiting risks to objectives makes it the most practical definition. The consequence tree is cut short to the sphere of objectives. If the effects do not relate to one's objectives one is not interested.

?

?

?

要查看或添加评论,请登录

Ravindranath Pandian的更多文章

  • Freedom to think

    Freedom to think

    Descartes said, “I think therefore I am”. It is amazing, painful and thought provoking to see how intellectuals were…

  • Faith Healing Reminiscences of a common man

    Faith Healing Reminiscences of a common man

    Faith healers’ version of religion is dismally narrow. It lacks the spiritual splendor of tradition, cosmic harmony…

    1 条评论
  • A War in the footsteps of Hitler

    A War in the footsteps of Hitler

    A War in the footsteps of Hitler As on 24 August 2022 The war has devastated Ukraine. There is no reason for this war…

  • Death of an Angel

    Death of an Angel

    My daughter picked up Puppy as an abandoned baby, merely a few days old, from the street. On the first day Puppy was…

  • Recollections of a retired teacher

    Recollections of a retired teacher

    He became a teacher by accident. He was originally a manager and then kicked upstairs into Corporate Learning.

    1 条评论
  • Travails of a Covid-Kidney-Sugar Patient in a Hospital

    Travails of a Covid-Kidney-Sugar Patient in a Hospital

    My temperature was high and I approached the hospital for early diagnosis and treatment of Covid. After an interview…

    1 条评论
  • The Soul

    The Soul

    Introduction Definition of the soul, also known as mind, self or consciousness, is still debated. However, here is one…

  • Where Philosophy of Mind Meets Neuroscience

    Where Philosophy of Mind Meets Neuroscience

    The Roots of Philosophy: Ethics and Spirituality Philosophy is the study of the nature, meaning, and purpose of life…

  • Short History of Classical Carnatic Composition

    Short History of Classical Carnatic Composition

    Music has great power over human mind. It lights up different areas of the brain, evokes memory, brings peace, calms…

    2 条评论
  • Return to Reason - Essential Problem Solving

    Return to Reason - Essential Problem Solving

    Introduction Essentially, problem solving improves life - personal life, business life and society at large. It is so…

    1 条评论

社区洞察

其他会员也浏览了