ABSTRACT
Introduction As has been noted in the previous chapters, politics and economics are inextricably linked. They do not exist in a vacuum and their impact on each other cannot be separated. Similarly, the link between probability and consequences also cannot be separated. Risk may simply be defined as risk = probability × consequences.1 In other words, the higher the probability that an event may occur, the greater its likely consequences. The word risk comes from the ancient Greek word rhiza, which means “that which comes from a root.”2 The Greeks used the term to refer to the fear of sailing a ship around a cliff. The ability to manage risk is what drives our economic system forward, and defining a rational process of risk taking is at the core of our modern market
economy. The goal should be to make reward commensurate with risk; the challenge is to understand and manage risk. The best way to make rational risk-taking decisions is by being armed with the best intelligence possible.
