Page 13 - Risk Management in current scenario

If a question is asked that who play the game of roulette, this is generally
played by those individuals who have abundant wealth and high-risk
appetite because the stakes are high and cost of play is expensive. If a
question is asked, that what is objective of playing this game, whether
for "Entertainment" or "Becoming Rich", the answer that will come out
is "Entertainment" because no one will play this game for the purpose
of becoming rich because odds of winning are heavily against the players
as probability of winning is much smaller. So it is not a game becoming
rich, however, played for the purpose of entertainment.

From the risk theory point of view, there are few important messages
coming out from the above game. The first message is "Uncertainty" is
linked to the "Future'. The second message is "Objective" is important in
the context of uncertainty; for example, in the context of entrainment,
this game may be played to take the risk, whereas if the objective is
becoming rich, this game is not worth playing. The third important thing
coming from the above game is "Risk Appetite", a person with low or
high-risk appetite; their objectives may change and take decision
accordingly.

What is Risk?
Now taking the above concept forward in defining the risk, which in my
opinion is the most important point as in the practical world, challenges
are often observed in defining the risk. In the simplest form, the risk is
defined as "effect on Future of Uncertainties on the objective".

The uncertainty about the future leads to the adverse outcome of losing
the game and favorable outcome of winning the game, the first one is
the risk and the second one is the opportunity. So uncertainties of the
future can do both the things, it deters achieving the objective and can
also present opportunities.

One important point to note is, "if there is a no objective, there is a no
risk". The no risk situation can arise only under two circumstances, one

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