Example: A person who buys options on any stocks can be exposed to significant economic risk without any potential for physical risk, whereas a person who spends the weekend bungee jumping is exposed to significant physical risk only.
Given the applicability of risk in almost every human activity, there are little consensus about the definition of risk. However, conscious acceptance that risk could be quantified objectively and subjectively. In 1921,Frank Knight summarized the difference between risk and uncertainty as uncertainty must be taken in a sense radically distinct from the familiar notion of Risk. It is true that risk that is measurable is easier to insure but we do care about all uncertainty, whether measurable or not.
"Risk is what's left over when you think you've thought of everything else," opined by Carl Richards, Financial advisor. The oxford English Dictionary definition of risk is “a chance or possibility of danger, loss, injury or other adverse consequences and the definition of at risk …show more content…
The engineering definition of risk is defined as the probability of an event occurring, that is viewed as undesirable, and an assessment of the expected harm from the event occurring. In other ward Risk equals to probability of an accident and consequence is in lost money/deaths. In contrast, risk in finance is defined in terms of variability of actual returns on an investment around an expected return, even when those returns represent positive