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Risk Matrix With Simple Quadrant Strategy
In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environment), often focusing on negative, undesirable consequences. Many different definitions have been proposed. The international standard definition of risk for common understanding in different applications is “effect of uncertainty on objectives”. The understanding of risk, the methods of assessment and management, the descriptions of risk and even the definitions of risk differ in different practice areas (business, economics, environment, finance, information technology, health, insurance, safety, security etc). This article provides links to more detailed articles on these areas. The international standard for risk management, ISO 31000, provides principles and generic guidelines on managing risks faced by organizations. Definitions ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Uncertainty
Uncertainty refers to epistemic situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown. Uncertainty arises in partially observable or stochastic environments, as well as due to ignorance, indolence, or both. It arises in any number of fields, including insurance, philosophy, physics, statistics, economics, finance, medicine, psychology, sociology, engineering, metrology, meteorology, ecology and information science. Concepts Although the terms are used in various ways among the general public, many specialists in decision theory, statistics and other quantitative fields have defined uncertainty, risk, and their measurement as: Uncertainty The lack of certainty, a state of limited knowledge where it is impossible to exactly describe the existing state, a future outcome, or more than one possible outcome. ;Measurement of uncertainty: A set of possible states or outc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Decision Theory
Decision theory (or the theory of choice; not to be confused with choice theory) is a branch of applied probability theory concerned with the theory of making decisions based on assigning probabilities to various factors and assigning numerical consequences to the outcome. There are three branches of decision theory: # Normative decision theory: Concerned with the identification of optimal decisions, where optimality is often determined by considering an ideal decision-maker who is able to calculate with perfect accuracy and is in some sense fully rational. # Prescriptive decision theory: Concerned with describing observed behaviors through the use of conceptual models, under the assumption that those making the decisions are behaving under some consistent rules. # Descriptive decision theory: Analyzes how individuals actually make the decisions that they do. Decision theory is closely related to the field of game theory and is an interdisciplinary topic, studied by econom ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Market Risk
Market risk is the risk of losses in positions arising from movements in market variables like prices and volatility. There is no unique classification as each classification may refer to different aspects of market risk. Nevertheless, the most commonly used types of market risk are: * ''Equity risk'', the risk that stock or stock indices (e.g. Euro Stoxx 50, etc.) prices or their implied volatility will change. * ''Interest rate risk'', the risk that interest rates (e.g. Libor, Euribor, etc.) or their implied volatility will change. * ''Currency risk'', the risk that foreign exchange rates (e.g. EUR/USD, EUR/GBP, etc.) or their implied volatility will change. * ''Commodity risk'', the risk that commodity prices (e.g. corn, crude oil) or their implied volatility will change. * '' Margining risk'' results from uncertain future cash outflows due to margin calls covering adverse value changes of a given position. * ''Shape risk'' * '' Holding period risk'' * ''Basis risk'' The ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Risk
Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial loss and uncertainty about its extent. A science has evolved around managing market and financial risk under the general title of modern portfolio theory initiated by Dr. Harry Markowitz in 1952 with his article, "Portfolio Selection". In modern portfolio theory, the variance (or standard deviation) of a portfolio is used as the definition of risk. Types According to Bender and Panz (2021), financial risks can be sorted into five different categories. In their study, they apply an algorithm-based framework and identify 193 single financial risk types, which are sorted into the five categories market risk, liquidity risk, credit risk, business risk and investment risk. Market risk The four standard market risk factors are equity ri ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Finance
Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of financial economics bridges the two). Finance activities take place in financial systems at various scopes, thus the field can be roughly divided into personal, corporate, and public finance. In a financial system, assets are bought, sold, or traded as financial instruments, such as currencies, loans, bonds, shares, stocks, options, futures, etc. Assets can also be banked, invested, and insured to maximize value and minimize loss. In practice, risks are always present in any financial action and entities. A broad range of subfields within finance exist due to its wide scope. Asset, money, risk and investment management aim to maximize value and minimize volatility. Financial analysis is viability, stability, and profitability asse ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Environmental Issues
Environmental issues are effects of human activity on the biophysical environment, most often of which are harmful effects that cause environmental degradation. Environmental protection is the practice of protecting the natural environment on the individual, organizational or governmental levels, for the benefit of both the environment and humans. Environmentalism is a social and environmental movement that addresses environmental issues through advocacy, legislation education, and activism. Environment destruction caused by humans is a global, ongoing problem. Water pollution also cause problems to marine life. Most scholars think that the project peak global world population of between 9-10 billion people, could live sustainably within the earth's ecosystems if human society worked to live sustainably within planetary boundaries. The bulk of environmental impacts are caused by the most wealthy populations in the globe consuming too much industrial goods. The UN Environmental ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Environmental Hazards
An environmental hazard is a substance, state or event which has the potential to threaten the surrounding natural environment or adversely affect people's health, including pollution and natural disasters such as storms and earthquakes. It can include any single or combination of toxic chemical, biological, or physical agents in the environment, resulting from human activities or natural processes, that may impact the health of exposed subjects, including pollutants such as heavy metals, pesticides, biological contaminants, toxic waste, industrial and home chemicals. Human-made hazards while not immediately health-threatening may turn out detrimental to a human's well-being eventually, because deterioration in the environment can produce secondary, unwanted negative effects on the human ecosphere. The effects of water pollution may not be immediately visible because of a sewage system that helps drain off toxic substances. If those substances turn out to be persistent (e.g. per ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interactions of Agent (economics), economic agents and how economy, economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and market (economics), markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on glossary of economics, these elements. Other broad distinctions within economics include those between positive economics, desc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Enterprise Risk Management
Enterprise risk management (ERM) in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives. ERM provides a framework for risk management, which typically involves identifying particular events or circumstances relevant to the organization's objectives (threats and opportunities), assessing them in terms of likelihood and magnitude of impact, determining a response strategy, and monitoring process. By identifying and proactively addressing risks and opportunities, business enterprises protect and create value for their stakeholders, including owners, employees, customers, regulators, and society overall. ERM can also be described as a risk-based approach to managing an enterprise, integrating concepts of internal control, the Sarbanes–Oxley Act, data protection and strategic planning. ERM is evolving to address the needs of various stakeholders, who want to understand the broad spec ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Society For Risk Analysis
The Society for Risk Analysis (SRA) is a learned society providing an open forum for anyone interested in risk analysis. SRA seeks to: * Bring together individuals from diverse disciplines and from different countries and provide them opportunities to exchange information, ideas, and methodologies for risk analysis and risk problem solving; * Foster understanding and professional collaboration among individuals and organizations for the purpose of contributing to risk analysis and risk problem solving; * Facilitate the dissemination of knowledge about risk and risk methods and their applications; * Encourage applications of risk analysis methods; * Promote advancement of the state-of-the-art in research and education on risk analysis; and * Provide services to its members to assist them in developing their careers in risk analysis. Publication In early 1979, Robert B. Cumming, the first SRA President, recognized the growing need for risk researchers and practitioners to publis ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Bayesian Inference
Bayesian inference is a method of statistical inference in which Bayes' theorem is used to update the probability for a hypothesis as more evidence or information becomes available. Bayesian inference is an important technique in statistics, and especially in mathematical statistics. Bayesian updating is particularly important in the dynamic analysis of a sequence of data. Bayesian inference has found application in a wide range of activities, including science, engineering, philosophy, medicine, sport, and law. In the philosophy of decision theory, Bayesian inference is closely related to subjective probability, often called "Bayesian probability". Introduction to Bayes' rule Formal explanation Bayesian inference derives the posterior probability as a consequence of two antecedents: a prior probability and a "likelihood function" derived from a statistical model for the observed data. Bayesian inference computes the posterior probability according to Bayes' theorem: ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
