What is Risk? Definition: Risk is a term in accounting and finance used to describe the uncertainty that a future event with a favorable outcome will occur. In other words, risk is the probability that an investment will not perform as expected and the investor will lose the money invested ...
Although it can be confused to control risk, inherent risk does not account for the factors that pertain to lack of control, but to the risk that a transaction would incur if no control is applied. Hence, inherent risk provides an indication of the worst-case scenario, in case all controls...
party with some type of protection in the event the other party cannot or will not meet the obligations of the contract. While just about any type of transaction will contain some degree of counterparty risk, the ideal situation is to have that risk be at a minimum for all parties ...
than it is now. The risks that modern organizations face have grown more complex, fueled by the rapid pace of globalization. New risks constantly emerge, often related to and generated by the now-pervasive use of technology. Climate change has been dubbed a "threat multiplier" by risk experts...
Risk tolerance is subject to the same factors that determine risk appetite. However, the amount of risk tolerance an organization accepts can vary on a case-by-case basis, depending on factors such as the nature of a project, a project's timeframe and the experience level of the people inv...
Why is risk management important? Without mitigating risks, businesses of all sizes are in danger of suffering serious, far-reaching consequences, from financial and data losses to decreased consumer trust and loyalty. Even worse, if you receive a fraudulent payment, you could be held financially ...
Risk tolerance is the amount of risk that an investor is willing to accept in an investment. To determine risk tolerance levels...
Risk management is the process of identifying, assessing and addressing any financial, legal, strategic and security threats to an organization.
Systemic risk is the possibility that an event at the company level could trigger severe instability or collapse an entire industry or economy. Systemic risk was a major contributor to thefinancial crisisof 2008. Companies considered to be a systemic risk are called "too big to fail." These in...
Unsystematic risk is the risk that is unique to a specific company or industry. It's also known as nonsystematic risk,specific risk, diversifiable risk, or residual risk. In the context of an investment portfolio, unsystematic risk can be reduced through diversification—while systematic risk is ...