Risk Essay Example | Topics and Well Written Essays - 1500 words

Risk - Essay Example In this context, the greater the risk, the more that alternative is unfavourable while if the risk is lower the alternative is the best for an individual to take a course of action into it (ALEXANDER, 2008). In my work I will examine the risks in relation to financial assets. Probability can be defined as the possibility that a given event will occur or take place; therefore, it is the possibility of an event coming to pass. For example, probability of a woman given birth to a boy child or a girl is 0.5. This means that there is a possibility of a girl or boy child being delivered. In this manner, is the method that is used to define and measure likelihood distribution of possible outcomes, and taking into consideration variables of its distributions at different occurrences (CONNOR, GOLDBERG & KORAJCZYK, 2010)? Due to different understanding of term risk many scholars are of other takes that measure risks especially those that emphasizes on negative results or that are below some known referent points. Different scholars have also defined risks in terms of how risky it is to take certain alternatives. In this scholars view risk as a perceptual variable. For example taking participants with a pair of gambles and asking them which gamble appear riskier to them. In addition one can assess individual’s sensitivity on riskiness by putting up a scale of 1(not at all risky) to 50 (extremely risky). This will give results on how individual view risks in a given situation. The major concern of such ratings or models is to have a grasp of individual perception on risks (ALEXANDER, 2008). In their perception on a given risk people judge risks and feel that their judgment is significant. Risks judgment is a routine carried out in the day to day activities. Managers approximate the riskiness of various courses of action and implement these actions with a lot of