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4 Examples of Negative Risk

Negative risk is a potential for loss. In common parlance, risk is always negative such that negative risk is synonymous with how most people think of risk. The term negative risk applies to risk management where there is a common practice of viewing opportunity as a positive risk or upside risk. In this context, the term negative risk is used to denote the regular type of risk that is a potential for a loss. The following are illustrative examples of a negative risk.

Pure Risk

A pure risk is a risk that isn't associated with opportunity. In other words, a risk that is only negative. For example, the risk of a residential fire.

Dread Risk

Dread risks are risks that are highly emotional such that people are willing to pay a great deal to minimize them. This mostly applies to risks that people fear such as the risk of an aircraft accident.

Speculative Risks

Speculative risks are risks that are taken to seize an opportunity. Generally speaking all opportunity is surrounded in risk. Likewise, in many cases the greater the opportunity the greater the risk. The term positive risk is only used in relation to speculative risks. This is done because risk and opportunity are inseparable such that it can be useful to view them as two sides of the same coin. For example, a restaurant owner who sees a positive risk of generating more income with a new location and the negative risk that the location will fail resulting in investment losses.

Human Experience

In terms of the human experience, responsible calculated risk taking is often portrayed in a positive light. However, the risk itself is viewed as a negative. In this context, positive risk is referred to as opportunity. For example, if you sail around the world you may face a number of safety risks that can be mitigated. These risks are negative while opportunities in areas such as self-fulfillment are positive.


Some people strongly feel that risk is always negative and reject the term positive risk. However, this term is generally accepted in risk management domains such as investing and project management.
Overview: Negative Risk
A potential for loss.
Opposite Of
Positive Risk
Related Concepts

Positive Risk

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