Broadly speaking, a risk assessment is the combined effort of:
- identifying and analyzing potential (future) events that may negatively impact individuals, assets, and/or the environment ; and
- making judgments "on the tolerability of the risk on the basis of a risk analysis" while considering influencing factors.
A credit risk is risk of default on a debt that may arise from a borrower failing to make required payments. In the first resort, the risk is that of the lender and includes lost principal and interest, disruption to cash flows, and increased collection costs. The loss may be complete or partial. In an efficient market, higher levels of credit risk will be associated with higher borrowing costs. Because of this, measures of borrowing costs such as yield spreads can be used to infer credit risk levels based on assessments by market participants.
In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system. It can be defined as "financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries". It refers to the risks imposed by interlinkages and interdependencies in a system or market, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire system or market. It is also sometimes erroneously referred to as "systematic risk".
Constant proportion portfolio investment (CPPI) is a trading strategy that allows an investor to maintain an exposure to the upside potential of a risky asset while providing a capital guarantee against downside risk. The outcome of the CPPI strategy is somewhat similar to that of buying a call option, but does not use option contracts. Thus CPPI is sometimes referred to as a convex strategy, as opposed to a "concave strategy" like constant mix.
Exposure assessment is a branch of environmental science and occupational hygiene that focuses on the processes that take place at the interface between the environment containing the contaminant of interest and the organism being considered. These are the final steps in the path to release an environmental contaminant, through transport to its effect in a biological system. It tries to measure how much of a contaminant can be absorbed by an exposed target organism, in what form, at what rate and how much of the absorbed amount is actually available to produce a biological effect. Although the same general concepts apply to other organisms, the overwhelming majority of applications of exposure assessment are concerned with human health, making it an important tool in public health.
Disease burden is the impact of a health problem as measured by financial cost, mortality, morbidity, or other indicators. It is often quantified in terms of quality-adjusted life years (QALYs) or disability-adjusted life years (DALYs). Both of these metrics quantify the number of years lost due to disability (YLDs), sometimes also known as years lost due to disease or years lived with disability/disease. One DALY can be thought of as one year of healthy life lost, and the overall disease burden can be thought of as a measure of the gap between current health status and the ideal health status. According to an article published in The Lancet in June 2015, low back pain and major depressive disorder were among the top ten causes of YLDs and were the cause of more health loss than diabetes, chronic obstructive pulmonary disease, and asthma combined. The study based on data from 188 countries, considered to be the largest and most detailed analysis to quantify levels, patterns, and trends in ill health and disability, concluded that "the proportion of disability-adjusted life years due to YLDs increased globally from 21.1% in 1990 to 31.2% in 2013." The environmental burden of disease is defined as the number of DALYs that can be attributed to environmental factors. Similarly, the work-related burden of disease is defined as the number of deaths and DALYs that can be attributed to occupational risk factors to human health. These measures allow for comparison of disease burdens, and have also been used to forecast the possible impacts of health interventions. By 2014 DALYs per head were "40% higher in low-income and middle-income regions."
Loss given default or LGD is the share of an asset that is lost if a borrower defaults.
Exposure at default or (EAD) is a parameter used in the calculation of economic capital or regulatory capital under Basel II for a banking institution. It can be defined as the gross exposure under a facility upon default of an obligor.
Expectancy–value theory has been developed in many different fields including education, health, communications, marketing and economics. Although the model differs in its meaning and implications for each field, the general idea is that there are expectations as well as values or beliefs that affect subsequent behavior.
Image quality can refer to the level of accuracy in which different imaging systems capture, process, store, compress, transmit and display the signals that form an image. Another definition refers to image quality as "the weighted combination of all of the visually significant attributes of an image". The difference between the two definitions is that one focuses on the characteristics of signal processing in different imaging systems and the latter on the perceptual assessments that make an image pleasant for human viewers.
Information technology risk, IT risk, IT-related risk, or cyber risk is any risk related to information technology. While information has long been appreciated as a valuable and important asset, the rise of the knowledge economy and the Digital Revolution has led to organizations becoming increasingly dependent on information, information processing and especially IT. Various events or incidents that compromise IT in some way can therefore cause adverse impacts on the organization's business processes or mission, ranging from inconsequential to catastrophic in scale.
Valuation risk is the risk that an entity suffers a loss when trading an asset or a liability due to a difference between the accounting value and the price effectively obtained in the trade.
In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value, often focusing on negative, undesirable consequences. Many different definitions have been proposed. The international standard definition of risk for common understanding in different applications is “effect of uncertainty on objectives”.
The annualized loss expectancy (ALE) is the product of the annual rate of occurrence (ARO) and the single loss expectancy (SLE). It is mathematically expressed as:
Exposure factor (EF) is the subjective, potential percentage of loss to a specific asset if a specific threat is realized. The exposure factor is a subjective value that the person assessing risk must define.
IT risk management is the application of risk management methods to information technology in order to manage IT risk, i.e.:
Astronauts are exposed to approximately 50-2,000 millisieverts (mSv) while on six-month-duration missions to the International Space Station (ISS), the Moon and beyond. The risk of cancer caused by ionizing radiation is well documented at radiation doses beginning at 100mSv and above.
Returns-based style analysis is a statistical technique used in finance to deconstruct the returns of investment strategies using a variety of explanatory variables. The model results in a strategy's exposures to asset classes or other factors, interpreted as a measure of a fund or portfolio manager's style. While the model is most frequently used to show an equity mutual fund’s style with reference to common style axes, recent applications have extended the model’s utility to model more complex strategies, such as those employed by hedge funds. Returns based strategies that use factors such as momentum signals have been popular to the extent that industry analysts incorporate their use in their Buy/Sell recommendations.
In mathematical finance, multiple factor models are asset pricing models that can be used to estimate the discount rate for the valuation of financial assets. They are generally extensions of the single-factor capital asset pricing model (CAPM).
In finance, a zero coupon swap (ZCS) is an interest rate derivative (IRD). In particular it is a linear IRD, that in its specification is very similar to the much more widely traded interest rate swap (IRS).
