The Language of Risk

This chapter provides recap and supplement for the definitions of risk and uncertainty and describes the essential rules of probability and the practice of probability assessment. It examines a ways of translating risk attitude into numbers to help with decisions. If one speak the language of risk, this can only assist them in communicating the extent of due diligence that has gone into their plans and recommendations. Uncertainty applies in situations where there is no known probability distribution for the range of possible future outcomes or no defined outcomes at all. Hazard risks are usually those in the physical environment, such as fire, flood or food poisoning. As its name suggests, an operational risk is one that arises from human behaviour and the nature of an organization's systems or processes. Given a finite number of possible outcomes, probability describes the likelihood of a given outcome as a proportion of all the possible outcomes that are relevant to the assessment.