THE MEANING AND THE REASON OF "THE RISK"

The variety of definitions of “RISK” is well illustrated in an article by Crowe and Horn. Denenberg and his co-authors define risk as “uncertainty of loss”. This is almost identical to the Mehr and Cammack definitions of risk as uncertainty about loss. Greenee defines risk as the “uncertainty as to occurrence of an economic loss”. Knight defines risk as “measurable uncertainty”. Willet defines risk as the objectified uncertainty regarding the occurrence of an undesirable event. Rabel claims that the traditional definition of risk is uncertainty concerning loss. (Jones L. Athearn, 1970). The common of these definitions is to equate risk with “UNCERTAINTY”.

Something that is uncertainty can make a result in favorable or unfavorable. According to Wideman, uncertainty which caused benefit known as the opportunity, whereas the uncertainty that appeared loss effect known as the risk. Example, the people who invest funds in capital and money market where face two possibilities. The possibilities are profitable investments and harmful investment. Therefore, any investment has risk, the higher risk of an investment; higher rates of return demanded by owners of capital. Positive relationship between the risks level of benefits are important considerations in investment appraisal.

Determines the choice is very important in investing. For choosing the type of investment, we must first understand the existing investment instruments, and adapted to our needs and abilities. Do not make an investment because of the others persuasion because all the benefits and risks of this investment cannot be borne by others, there is the risk for him/her. Those caused us to select “RISK” as our group name because the risk will teach us to learn to choose the best choice because “life is full of choices”. Not only the choices of doing business or investment but also about daily life.

Source: www.wikipedia.com