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9 Meanings of Risk

Risk is the potential for loss or gain due to action or inaction. This has several different meanings depending on the context as follows.

Pure Risk

When most people say risk -- they are talking about pure risk. Pure risk is a potential for something bad to happen with no possibility of a gain. For example, if you drive a bicycle there is a chance you will get into an accident and be injured. People tend to think of risk as a completely bad thing and equate risk with pure risk.

Speculative Risk

Speculative risk is a chance that you take that may result in gains or losses. For example, investing in stocks. Unlike pure risk, this can't traditionally be insured.

Upside Risk

Upside risk is a term for uncertain positive results. This is mostly applied to investments where this represents any uncertain but possible investment gains. For example, if you purchase a home you have the upside risk that the home will increase in value and the downside risk that it will go down in value.

Positive Risk

Positive risk is the potential for positive results beyond your plans or expectations. A common example of positive risk is the chance that a project will be delivered ahead of schedule and/or underbudget. This is a positive thing that shouldn't be avoided. However, in many cases it is essentially a planning failure such that it may be viewed negatively. If your project is six months early, you probably inflated your estimates.


The same actions that create risk also may create opportunity and vice versa. This is the reason that in professions such as finance, risk management and project management risk is viewed as having a negative and positive side. In other words, opportunity can be viewed as a risk.


People strongly associate risk with taking action. However, risk results from inaction too. For example, if you don't maintain the roof on an old home, the risk of a leak will increase due to your inaction.


It is common to present risk taking as inherently bad. This is essentially a myth. Risk is the result of uncertainty and is built into every action and inaction that you take. As such, the notion that risk taking is bad is absurd as risk taking is completely unavoidable. If you avoid the risk of commuting to work you must face the risk that your house will burn down while you're home. There is simply is no such thing as not taking risks.

Calculated Risk

A calculated risk is an action or inaction that has been well considered. For example, a homeowner who takes a look at their roof and decides that maintenance isn't yet required is taking a calculated risk that some issue will occur with the roof.

Uncalculated Risk

An uncalculated risk is a risk that isn't well considered. Individuals who claim to avoid risk may really be taking uncalculated risks. For example, if you "avoid" investment risk by putting your savings in a low interest bank account you may face the risk that inflation will reduce the value of those savings towards zero in the long run.
Overview: Risk Meaning
The potential for loss or gain due to action or inaction.
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This is the complete list of articles we have written about risk.
AI Risk
Risk Avoidance
Brand Risk
Budget Risk
Business Risks
Change Risk
Compliance Risk
Concentration Risk
Cost Risk
Country Risk
Credit Risk
Demand Risk
Dread Risk
Economic Risk
Exchange Rates
Existential Risk
External Risk
Financial Risk
Force Majeure
Good Risk
Human Error
Risk Identification
Infinite Risk
Inflation Risk
Inherent Risk
Interest Rates
Internal Risks
Investing Risk
Legal Risk
Liquidity Risk
Model Risk
Moment Of Risk
Natural Disasters
Negative Risk
Operations Risk
Passive Risk
Personal Risk
Political Risk
Process Risk
Procurement Risk
Product Risk
Project Risk
Pure Risk
Quality Risk
Recession Risk
Risk Mitigation
Refinancing Risk
Regulatory Risk
Reputational Risk
Residual Risk
Resource Risk
Revenue Risk
Risk Appetite
Risk Aversion
Risk Examples
Risk Management
Risk Management Process
Risk Matrix
Risk Meaning
Risk Measurement
Risk Taking
Risk Tolerance
Risk Triggers
Risk vs Issue
Risk vs Opportunity
Risk vs Uncertainty
Risk-Reward Ratio
Seasonal Risk
Secondary Risk
Security Risk
Settlement Risk
Risk Sharing
Speculative Risk
Strategic Risk
Strategy Risk
Supply Risk
Systemic Risk
Tactical Risk
Taxation Risk
Technology Risk
Risk Transfer
Unforced Error
Upside Risk
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