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10 Questions

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Definition of Risk in Business

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Questions and Answers

What does a 70% probability of loss at a supermarket signify?

No risk involved

High level of risk

Low level of risk (correct)

Certainty of loss

How does uncertainty differ from risk?

Uncertainty can be expressed numerically, risk cannot

Risk is about doubt, uncertainty is about probability

Uncertainty is subjective, risk is objective (correct)

Uncertainty is definite, risk is indefinite

If one person has a 90% chance to lose and another has a 10% chance to lose, both losing results in them losing:

$1,000,000 and $100,000 respectively

$900,000 and $100,000 respectively

$1,000,000 each

$500,000 each (correct)

Which characteristic makes risk different from uncertainty?

Measurable Signup and view all the answers

How would you describe the relationship between the amount of loss and the probability of an event occurring?

No relationship Signup and view all the answers

What is the formula for calculating objective risk?

Probable variation of actual loss / Probable average loss Signup and view all the answers

How does the text define risk in terms of deviations between actual and expected outcomes?

A standard deviation in statistics Signup and view all the answers

Based on the text, what happens to risk when the variation of outcomes decreases?

Risk decreases Signup and view all the answers

What is a characteristic of risk, according to the text?

At least one outcome must be undesired Signup and view all the answers

What does the text suggest about uncertainty being different for individuals?

Uncertainty is subjective and varies based on an individual's mindset Signup and view all the answers