02.02 |【02】| What is risk ?

⚠ Decision maker should know that…

ℹ Risk ≠ Uncertainty

 

ℹ Risk…

  • potential for loss

  • ✅ chances of a bad thing happening OR a good thing not happening

  • quantifiable — measurable — understandable — manageable

  • ✅ associated probabilities — known

  • use of financial modelling — feasible

 

ℹ Uncertainty…

  • unsure of the outcomes — future events largely unknown

  • ❎ unquantifiable — immeasurable — uncontrollable

  • ❎ associated probabilities — unknown

  • ❎ use of financial modelling — unfeasible