Discussion
Which of the following explains the concept of risk ?
Answer: A
Risk arises when the variability of possible outcomes is very high.
Risk describes a situation where several outcomes are possible, each with a known probability. It is measured by the dispersion of those outcomes around the expected value, usually the variance or standard deviation. The greater the spread of possible outcomes, the greater the risk.
Low or zero variability means the outcome is nearly certain, so there is little or no risk. Constant variability does not describe risk, and 'highly accurate' variability is not a meaningful measure.
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