In finance, risk refers to the degree of uncertainty and/or potential financial loss inherent in an investment decision. In general, as investment risks rise, investors seek higher returns to compensate themselves for taking such risks.

Why should we measure loss severity? Measured to help determine risk classification and determination of transfer amounts. The reading “A Scientific View of Risk” has a different definition of risk than we have used in class.

Risk. A measure of uncertainty about the future pay off to an investment accessed over sometime horizon and relative to a benchmark.

Definition: Risk implies future uncertainty about deviation from expected earnings or expected outcome. Risk measures the uncertainty that an investor is willing to take to realize a gain from an investment.

Risk is the chance or probability that a person will be harmed or experience an adverse health effect if exposed to a hazard. It may also apply to situations with property or equipment loss, or harmful effects on the environment.

Describe the threat (or opportunity) which is the source of the risk, Describe the event that could result from the identified threat or opportunity, Describe the consequences (or impacts) of that event….Risk is essentially made up of three components, these being:

• Threats or Opportunities.
• Risk Events.
• Risk Impacts.

Summary. So you should now know what a hazard is (something with the potential to cause harm) and what a risk is (the chance that somebody could be harmed by the hazard).

1. Identify hazards in risk assessment

1. speak to your employees – they may be aware of hazards that aren’t so obvious to you.
2. observe the tasks carried out by your employees.
3. check your accident, near miss and ill-health records.
4. read instructions for tools and equipment – they will inform you of hazards.