Business Magazine

Risky Business - What is Risk, Anyway?

Posted on the 13 March 2014 by Wallstlawblog @Wallstlawblog

I believe it was Chaucer, in his masterpiece The Canterbury Tales, who wrote this classic line:

'To manage risk, one must first know what it is.'

Ok, I made up the whole Chaucer part. Still, it is pretty hard for businesses to master the art and science of risk management without first defining risk itself.

* * *

So what is risk? Well, Here is a nice compact definition that I like: 

Risk equals the inherent chance of a bad result from a decision or course of action.

 
Not wordy enough for you? No worries. Here is a bit more expansive definition of risk:

Risk is a foreseeable possibility that an uncertain future will produce an unexpected negative outcome.  The more risk a given action carries, the greater the chance for bad results and/or increased negative consequences.

I like the first definition better simply because it is short and to the point. If you have a good definition for risk, feel free to comment below...

By Brett Sherman; The Sherman Law Firm


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