Definition of Risk


Definition of Risk:

Risk can be defined in many ways.  When we think about the definition of risk, we think about the following:

  • as any source of randomness or chance that an event may occur.
  • Risk can have an adverse impact on the operations, assets, or cash flows of a company or individual.
  • Risks can be financial versus non financial risks

Types of risk include the following:

  • Financial risk
    • Market Risk
    • Funding risk
    • Credit risk
    • Liquidity risk
    • Legal risk
  • Natural or man made perils
  • Accidents
  • Hazards
    • Human
    • Environmental
    • Mechanical
    • Energy
    • Chemical

 

Risk can also be broken down between Core and Non-Core risks.

  • Core risks facing a business is the risk that the firm is in business to take and manage.
  • Non-core risks are risks that the firm does not necessarily need to retain in order to operate in primary business.

 

Other related topics:

See Risk Management

 

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