6Knowns and Unknowns: The Risk Factor

The revolutionary idea that defines the boundary between modern times and the past is the mastery of risk: the notion that the future is more than a whim of the gods and that men and women are not passive before nature.—Peter L. Bernstein, Against the Gods:The Remarkable Story of Risk (1998)

What Is Risk?

A risk is a proposed future event that would have a significant impact on you or on something you care about if it should happen. The effect may be negative (a threat) or positive (an opportunity), but the outcome won’t be revealed until the event actually occurs. Risk, above all, involves uncertainty. That’s how we distinguish a risk from a problem: a problem is certain.

We often manage risk by denial, ...

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