Risk, broadly speaking, is exposure to uncertainty. Risk is also the concept used to describe all of the uncertain environmental variables that lead to variation in and unpredictability of outcomes. More colloquially, risk is about the chance of a loss or adverse outcome as a result of an action, inaction, or external event.
Risk exposure is the extent to which the underlying environmental or market risks result in actual risk borne by a business or investor who has assets or liabilities that are sensitive to those risks. It is the state of being exposed or vulnerable to a risk. Risk exposure results from the decisions of an organisation or investor to take on risk-sensitive assets and liabilities.
Risk management is the process by which an organisation or individual defines the level of risk to be taken, measures the level of risk being taken, and adjusts the latter toward the former, with the goal of maximising the company’s or portfolio’s value or the individual’s overall satisfaction, or utility.
