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Risk Management Definitions and examples

Below are some definitions and examples of risk management that explains risk with different aspects, such as risk management in general, in finance, in food industry, in insurance, in securities trading, in workplace.


Risk Management in General:

A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal weaknesses, and that may be avoided through pro-active action.

Risk Management in Finance:

The possibility that an actual return on an investment will be lesser than the expected return. Financial risk is separated into the following categories: Basic risk, Country risk, Default risk, Delivery risk, Capital risk, Economic risk, Interest rate risk, Liquidity risk, Exchange rate risk, Operations risk, Payment system risk, Political risk, Refinancing risk, Payment system risk, Reinvestment risk, Sovereign risk, Settlement risk, and Underwriting risk.

Risk Management in Food industry:

The probability that due to a certain threat in food there will be a adverse effect to a certain magnitude.

Risk Management in Insurance:

A condition where the possibility of a variable (such as burning down of a building) is known but when a mode of occurrence or the actual value of the occurrence (whether the fire will occur at a specific property) is not.
A risk is not an uncertainty (where neither the probability nor the mode of occurrence is known), a danger (cause of loss), or a threat (something that makes the occurrence of a danger more likely or more severe). 

Risk Management in Securities trading:

The possibility of a loss or drop in value. Trading risk is separated into two general categories: (1) Systemic risk disturbs all securities in the same class and is related to the overall capital-market system and therefore cannot be removed by diversification. Also termed as market risk. (2) Non systematic risk is any risk that isn't market-related or is not systemic. Also termed as non market risk, extra-market risk, or systemic risk.

Risk Management in Workplace:

Product of the consequence and probability of a dangerous event or phenomenon.

For example, the risk of developing cancer is estimated as the incremental possibility of developing cancer over a lifetime as a consequence of exposure to potential carcinogens (cancer-causing substances).

Examples of risk in a sentence:

  • I favor not to expose my money to too much risk.
  • The mark of risk is minimal.
  • All investments have a component of risk.
  • The journey didn't seem like much of a risk.
  • I'm conscious of the risks associated with this treatment.
  • There is a risk of liver injury with this medication.
  • Wearing a seat belt critically reduces the risk of injury or death in a car accident.
  • We feel that this product grants a significant risk to public health.
  • Smoking is a risk to your lungs.
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