Outline what is meant by risk

This type of risk affects the value of bonds more directly than stocks and is a significant risk to all bondholders.

As interest rates rise, bond prices in the secondary market fall—and vice versa. This type of risk can stem from a change in government, legislative bodies, other foreign policy makers, or military control. Counterparty risk is the likelihood or probability that one of those involved in a transaction might default on its contractual obligation.

Counterparty risk can exist in credit, investment, and trading transactions, especially for those occurring in over-the-counter OTC markets. Financial investment products such as stocks, options, bonds, and derivatives carry counterparty risk. Typically, investors will require some premium for illiquid assets which compensates them for holding securities over time that cannot be easily liquidated. The risk-return tradeoff is the balance between the desire for the lowest possible risk and the highest possible returns.

In general, low levels of risk are associated with low potential returns and high levels of risk are associated with high potential returns. This will be based on factors such as age, income, investment goals, liquidity needs, time horizon, and personality. The risk-return tradeoff only indicates that higher risk investments have the possibility of higher returns—but there are no guarantees.

On the lower-risk side of the spectrum is the risk-free rate of return —the theoretical rate of return of an investment with zero risk. It represents the interest you would expect from an absolutely risk-free investment over a specific period of time.

The most basic — and effective — strategy for minimizing risk is diversification. Diversification is based heavily on the concepts of correlation and risk. There are several ways to plan for and ensure adequate diversification including:. Keep in mind that portfolio diversification is not a one-time task. The most effective way to manage investing risk is through regular risk assessment and diversification. Finding the right balance between risk and return helps investors and business managers achieve their financial goals through investments that they can be most comfortable with.

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Measure content performance. Description: If the prices of goods and services do not include the cost of negative externalities or the cost of harmful effects they have on the environment, people might misuse them and use them in large quantities without thinking about their ill effects on the env. It is an indicator of the efficiency with which a company is deploying its assets to produce the revenue. Asset turnover ratio can be different fro.

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Next 2. Establish who might be harmed and how in risk assessment. How can we improve this page? Subscribe to receive updates on our services and activities Get updates. Contact us For information on workplace health, safety and wellbeing, you can speak to one of our specialist advisors.

Message us Phone us free on Follow us Facebook Twitter. Our organisation Accessibility Privacy information Terms and conditions. The CMS for this site does not support your browser. Risk is the chance or probability that a person will be harmed or experience an adverse health effect if exposed to a hazard.

It may also apply to situations with property or equipment loss, or harmful effects on the environment. These risks are expressed as a probability or likelihood of developing a disease or getting injured, whereas hazard refers to the agent responsible i.

Regardless of the terminology used, the critical steps are to make sure the workplace has taken a systematic approach that looks for any hazards existing or potential , has take appropriate steps to determine the level of risk of these hazards, and then taken measures to control the risk or eliminate the hazard.

Hazard control describes the steps that can be taken to protect workers and the workplace. A general definition of adverse health effect is "any change in body function or the structures of cells that can lead to disease or health problems".

The effects can be acute, meaning that the injury or harm can occur or be felt as soon as a person comes in contact with the hazardous agent e. Some responses may be chronic delayed. For example, exposure to poison ivy may cause red swelling on the skin two to six hours after contact with the plant. On the other hand, longer delays are possible: mesothelioma, a kind of cancer in the lining of the lung cavity, can develop 20 years or more after exposure to asbestos.

Once the hazard is removed or eliminated, the effects may be reversible or irreversible permanent.