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Risk is the lack of certainty about the outcome of making a particular choice. Statistically, the level of downside risk can be calculated as the product of the probability that harm occurs (e.g., that an accident happens) multiplied by the severity of that harm (i.e., the average amount of harm or more conservatively the maximum credible amount of harm).
Firefighters are exposed to risks of fire and building collapse during their work.. In simple terms, risk is the possibility of something bad happening. [1] Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environment), often focusing on negative, undesirable consequences. [2]
In economics, a moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs associated with that risk, should things go wrong.
Zero-risk bias is based on the way people feel better if a risk is eliminated instead of being merely mitigated. [2] Scientists identified a zero-risk bias in responses to a questionnaire about a hypothetical cleanup scenario involving two hazardous sites X and Y, with X causing 8 cases of cancer annually and Y causing 4 cases annually.
Risk of ruin is a concept in gambling, insurance, and finance relating to the likelihood of losing all one's investment capital or extinguishing one's bankroll below the minimum for further play. [1]
Factors of risk perceptions. Risk perception is the subjective judgement that people make about the characteristics and severity of a risk. [1] [2] [3] Risk perceptions often differ from statistical assessments of risk since they are affected by a wide range of affective (emotions, feelings, moods, etc.), cognitive (gravity of events, media coverage, risk-mitigating measures, etc.), contextual ...
The risk premium is used extensively in finance in areas such as asset pricing, portfolio allocation and risk management. [2] Two fundamental aspects of finance, being equity and debt instruments, require the use and interpretation of associated risk premiums with the inputs for each explained below: