I can’t seem to get most explanations from the internet and people seem to use the term in numerous ways.
Update: Ok I think I get it. People conflate the hazard and risk concept together. So when people discuss risks they are actually discussing probable hazards.
The reason this confused me is because entrepreneurs will ask about what risks there are in a project. When they just use it as a shorthand meaning what could go wrong that’s out of their control.
What also makes it confusing is that risk analysis calls the hazard column a risk column, then proceeds to add columns of impact and likelihood. When the risk should be the column that is a multiplication oh the impact and likelihood wrt the hazard.
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Yup. Risk means different things in different contexts.
Financial risk is typically a measure of uncertainty in financial outcomes.
Risk of getting a disease is a measure, usually a probability, of getting said disease.
Engineering risk could be a measure of getting certain outcomes coupled with the negative impact of those outcomes.
These are somewhat similar but quite different conceptions of risk.
In the engineering space, risk is the product of the likelihood and consequence of an event.
Something with a low likelihood but massive consequence is deemed high risk, as an example:
The steel rope of an elevator braking has a high consequence – mass casualty, major downtime in that building and probably will lead to many lawsuits.
But at the same time, it has a low likelihood because of design criteria, manufacturing checks and balances, installation practices and maintainenance practices – these are known as controls – this means the risk of an elevator rope braking is considered low, but take any of these controls out, especially the maintenance one, and the risk increases.
We use semi-standardised risk assessments with matrices to determine which events have high risk and should have additional controls put in place – this can be a simple quality assurance step or scheduled replacement of major components.
A hazard is an event with the potential to cause harm. The risk presented by a hazard is a combination of the likelihood of the hazard occurring and the severity of the consequences of the hazard occurring.
Risk in the broadest sense, is the probability of a negative outcome. This can be quantified explicitly (like interest rates on a loan as a proxy for financial risk) or fuzzy (high risk of getting punched in the face when talking smack to a bouncer).
I’m guessing you’re referring to a particular context, and so you have to outline what context you’ve heard risk.
In business terms, risk generally refers to the probability of something incurring an unexpected outcome. It doesn’t necessarily have to be negative.
Risk is when there’s a chance of something bad happening.
If you invest some of your money in a stock, then you might earn money if the stock goes up in price (which is good), but you might lose money if the stock goes down in price (which is bad). So, there is risk in investing your money in stocks.
If you go on a picnic, the weather might be lovely and you’ll have a good time (which is good), or the weather might rain and ruin your picnic (which is bad). So, there is risk in going on a picnic.
If you drive to work in the morning, you might get to work on time without any incidents (which is good), or you might get into a car accident on the way (which is bad). So, there is risk in driving your car to work in the morning.
Some things are riskier than others, meaning the chance of something bad happening is quite high (like the stock price going down in the stocks example), or that the bad thing that could happen is very, very bad (like the car accident in the driving example). But since risky things can also lead to something good happening, we have to calculate and decide if doing a risky thing is worth the chance of the good thing happening versus the chance of the bad thing happening.
“Risk” just means “chance”. Typically, “chance of something you *don’t want* happening”.
“There’s a chance of falling over when you’re learning how to ride a bike” and “There’s a risk of minor injury when you’re learning how to ride a bike” are both the same thing.
Risk is the uncertainty of an outcome occurring, usually used when at least one of the possible outcomes is bad. You’ll hear things like financial risk (chance of losing money), risky behavior (doing things that have a high chance of causing you or someone else harm) or even a patient being described as a “fall risk” (they may have a higher chance of being seriously injured if they were to fall, be unable to get back up, or simply be more likely to fall over unexpectedly).
In simplest terms. A risk is the ability of something you do to backfire in any way.
So gambling is a risk based deal. You pay money but you risk losing it, there’s a chance you lose it
Playing acrobatics without protection, means that you risk your safety, health, and possibly even life for the sake of a performance
There is this term “risk factors” which (I’m not a medic) is like, the things you might have that increases the chance that you get a specific disease
So having a family of diabetics is a risk factor for you to get it. Eating a sugary diet is also a risk factor.
They increase the risk(chance) that you get diabetes
Boiled down to its most basic form, a risk is simply the potential for bad.
Risk of harm? Hurting your body is bad
Financial risk? Losing money is bad
Emotional risk? Feeling sad is bad
None of these are a guarantee that it happens, just the chance it will
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