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Uncertainty is at the very core of the concept of risk itself; as
risk can alternatively be defined as ‘actually uncertainty about
the outcome in a given situation’.
Uncertainty by itself does not exist in the natural order of things
though there are a number of probable outcomes, which may be
uncertain. For example: Take a music event in open air, a
cricket test match, world cup football–all of these are planned
months/ years ahead. The possibility of weather turning these
events redundant; the risk of having war; internal turmoil; riots
and what not; There is surely uncertainty surrounding all of
these events.
Risk therefore arises out of uncertainty. It can also represent
the possibility of an outcome being different from the expected.
The events that give rise to such risks are known as perils.
Peril
A peril is an event or circumstance that causes or may
potentially cause a loss.
The term ‘risk’ is often used to mean both the event which may
give rise to some amount of loss, and the various factors which
may adversely influence the event and create a possible
outcome of a loss.
When we think about cause, we must be clear that there are at
least these two aspects to it.
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