How do you define risk?

It largely depends on the industry, and the point of view.

Examples:

• Risk as an undesirable event
  
• Risk as a probability function is the chance of serious adverse outcomes. This is a common notion in medicine, for example.
  
• Risk as variance of the distribution of outcomes. This is a common perspective in finance and economics.
  
• Risk as expected loss is a notion common to the insurance industry.

Endogenous and Exogenous Risk: Exogenous risks are risks over which we have no control and which are not affected by our actions. Earthquakes or hurricanes are good example of exogenous risks. Endogenous risks, on the other hand, are risks that are dependent on our actions. Car accident is an example of risk where a strong portion is endogenous. While a driver has no control over other drivers (the exogenous portion), the probability of an accident is strongly influenced by the driver’s behavior and ability (endogenous).

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See Also Components Of Risk

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Contributors: Steven Black

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Category Check Lists, Category Project Management Category Risk