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Definition of risk and uncertainty

      

Definition of risk and uncertainty

  

Answers


Raphael
Risk is a situation where all possible outcomes are known for a given management decision and the probability associated with each possible outcome is also known. Risk refers to variability or outcomes which are measurable in an empirical or quantitative manner. Risk is insurable.

Uncertainty exists when one or both of two situations exist for a management decision. Either all possible outcomes are unknown, the probability of the outcomes is unknown or nether the outcomes nor the probabilities are known. Uncertainty refers to future events where the parameters of probability distribution (mean yield or price, the variance, range or dispersion and the skew and kurtosis) cannot be determined empirically. Uncertainty is not insurable.
raphael answered the question on August 12, 2021 at 06:19


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