Finance is concerned with money management and acquiring funds.
Financial risk arises from uncertainty about financial returns. It includes
market risk, credit risk, liquidity risk and operational risk. In finance, risk
is the possibility that the actual return on an investment will be different
from its expected return. This includes not only “downside risk” (returns below
expectations, including the possibility of losing some or all of the original
investment) but also “upside risk” (returns that exceed expectations). In
Knight’s definition, risk is often defined as quantifiable uncertainty about
gains and losses. This contrasts with Knightian uncertainty, which cannot be
quantified. (資料來源)
In general, the aim of risk management is to assist organizations in
“setting strategy, achieving objectives and making informed decisions”. The
outcomes should be “scientifically sound, cost-effective, integrated actions
that [treat] risks while taking into account social, cultural, ethical,
political, and legal considerations”. In contexts where risks are always
harmful, risk management aims to “reduce or prevent risks”. In the safety field
it aims “to protect employees, the general public, the environment, and company
assets, while avoiding business interruptions”.
For organizations whose definition of risk includes “upside” as well as
“downside” risks, risk management is “as much about identifying opportunities as
avoiding or mitigating losses”. It then involves “getting the right balance
between innovation and change on the one hand, and avoidance of shocks and
crises on the other”. (資料來源)