ABSTRACT
Risks that stem from the external environment result in risks associated with internal decisions as choices have to be made in response to the changed circumstances. Businesses face risks in the same way that we as individuals face them, in that they are accepted as a part of normal trading; to try to eliminate them all would be impractical and ultimately result in the demise of the organisation. To resolve some of the difficulties it is worth spending some time discussing the terms and concepts necessary to understanding the paradoxical nature of risk. Sensitivity analysis is an important aspect of risk assessment; it highlights those factors or variables that have the greatest effect on the predicted outcome. Many workers in the field of risk analysis and management have found it useful to categorise risks as an aid to understanding the subject and a variety of categorisation systems has resulted.
