What do you Know about risk?

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What do you Know about risk?

What do you Know about risk? Risk has been defined as the uncertainty as to the occurrence of an economic loss. It is the passivity of adverse result from a desired outcome. Risk and probability are not synonymous.
We must understand the difference between risk and probability. The terms hazard and peril are closely related to probability than they are to risk. For example, collision is a peril which causes motor car accident
and loss. The condition which makes the occurrence of collision more likely is called the hazard. For example, foggy weather is the hazard which creates the peril of collision. This means probability of collision
increases when the hazard of foggy weather creates the peril of collision.Therefore, one can say that probability is the long run chance that out of a given number of possibilities, certain number of specific events will occur. But risk is the uncertainty as to occurrence of a loss. This is measured in the terms of degree of variation that actual events bear to probable events. The larger the number of exposures, the smaller is the nsk. This is because under this situation, the smaller is the variation that actual events bear to the probable events. This is called the law of large number. The greater the uncertainty, the greater is the risk.

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