risk

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Risk

Often defined as the standard deviation of the return on total investment. Degree of uncertainty of return on an asset. In context of asset pricing theory. See: Systematic risk.

Risk

The uncertainty associated with any investment. That is, risk is the possibility that the actual return on an investment will be different from its expected return. A vitally important concept in finance is the idea that an investment that carries a higher risk has the potential of a higher return. For example, a zero-risk investment, such as a U.S. Treasury security, has a low rate of return, while a stock in a start-up has the potential to make an investor very wealthy, but also the potential to lose one's entire investment. Certain types of risk are easier to quantify than others. To the extent that risk is quantifiable, it is generally calculated as the standard deviation on an investment's average return.

risk

The variability of returns from an investment. The greater the variability (in dividend fluctuation or security price, for example), the greater the risk. Because investors are generally averse to risk, investments with greater inherent risk must promise higher expected yields.

Risk.

Risk is the possibility you'll lose money if an investment you make provides a disappointing return. All investments carry a certain level of risk, since investment return is not guaranteed.

According to modern investment theory, the greater the risk you take in making an investment, the greater your return has the potential to be if the investment succeeds.

For example, investing in a startup company carries substantial risk, since there is no guarantee that it will be profitable. But if it is, you're in a position to realize a greater gain than if you had invested a similar amount in an already established company.

As a rule of thumb, if you are unwilling to take at least some investment risk, you are likely to limit your investment return.

risk

see UNCERTAINTY AND RISK.

risk

Uncertainty regarding the possibility of loss.

References in periodicals archive ?
The new edition further characterizes a manufacturer's policy for determining acceptable risk as "essential" and recommends, as one option, matrices (examples provided in Annex D), which document the combinations of probability of harm and severity of harm that are acceptable or unacceptable.
A guide to the determination of acceptable risk and realistic performance objectives is followed by a discussion to establish the effectiveness of current codes to achieve acceptable performance.
In combat, the specific mission objectives may make the level of acceptable risk fairly clear.
Nasrallah said 43% of doctors agreed that diabetes is an acceptable risk factor, and a slightly higher percentage said that weight gain was an acceptable risk factor in selecting a drug therapy.
Scientific advisers to the European Commission say frequent indoor burning of candles with lead cores exposes families to "an un- acceptable risk".
The next group (about 35%) consists of excellent clients that reflect minor but acceptable risk; an example might be a client with poor internal controls who's willing to improve.
A camp's staff that has never experienced a hazard tree accident usually makes statements such as -- "That tree has been there for many years and it hasn't failed yet." "Hazard trees are an acceptable risk." "The board doesn't want anything done to the trees." "We don't want to change the looks of the camp." Or, "We don't have time."
Defining what is and is not an acceptable risk is the legacy of AIDS treatment activism.
Warren argues that during the debates throughout the century, the definition of acceptable risk had to be negotiated and this negotiation was often controlled by industry, which funded the scientific research on which acceptable blood lead levels were determined.
Acceptable Risk by Sarah Lichtenstein, Baruch Fischoff, and Stephen Darby, Cambridge University Press, 40 W.
If the prevalence of UTI is less than 2% in a given population, one UTI would be missed out of urinalyses of 250 febrile children due to a false negative--an acceptable risk, Dr.
The levels are compared with acceptable risk ranges.