ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Business Dictionary defines risk as “a probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action.”

Detailed explanation-2: -Risk Probability is the determination of the likelihood of a risk occurring. This likelihood can be based on historical project information, does the risk typically occur? Or the likelihood of risks can come from interviews or meetings with individuals who would have knowledge of the probability of risks occurring.

Detailed explanation-3: -A loss exposure is a possibility of loss, it is more specifically, the possibility of financial loss that a particular entity or organization faces as a result of a particular peril striking a particular thing that you have assigned value to.

Detailed explanation-4: -Risk Exposure is comprised of Risk Impact and Probability that the risk will materialize. The risk impact is the cost to the project if the risk materializes. The probability is the likelihood that it will materialize. Risk Exposure = Risk Impact X Probability.

Detailed explanation-5: -strategic risk-eg a competitor coming on to the market. compliance and regulatory risk-eg introduction of new rules or legislation. financial risk-eg interest rate rise on your business loan or a non-paying customer. operational risk-eg the breakdown or theft of key equipment.