Risk

Definition

The formal definition of Risk (adopted by ISO 31000) accepts that risk is the effect of uncertainty on objectives and the deviation of actual outcomes from expectations.

Notes

• The definition puts emphasis on the objectives, which are always with reference to an individual or a Legal Entity. This highlights the subjective nature of risk
• The definition puts emphasis on the element of surprise. It is thus not aligned with the casual use of the term risk, in that a positive deviation from expectations (an unexpected but not adverse outcome) would not normally be characterised as risk

Examples

• In a business context Risk means, informally, the potential for Loss or other adverse outcome affecting an individual or an organization.

Issues and Challenges

• Frequently and erroneously assumed to be some combination of the probability of an event and its consequence (e.g. by constructing a product of quantitative measures of likelihood and severity)

See Also

• Risk Event
• Risk versus Hazard
• Risk versus Risk Factor
• Risk versus Uncertainty

Disclaimer

This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with or correctly interprets the concepts covered by the FIBO ontology.