Key Takeaways

- Risk, depending upon the context, can have different meanings to different groups. At the organizational level, OSH practitioners view risk derived from hazards, while production and operational managers see risk coming from operations. At the senior-executive level, a much broader view is taken to include financial and strategic risks that threaten business objectives.

- These various perspectives have led to the development of many definitions for the term “risk,” raising some confusion as to its universal meaning. Risk management and management systems standards have their own definitions of risk, while safety standards and dictionaries describe risk differently.

- For the benefit of those who manage risk, it may be time to reexamine the concept of risk and understand its true meaning. This article presents the authors’ viewpoints on risk, uncertainty, opportunity and unique events known as black swans and grey rhinos.

WHAT IS RISK? Depending upon the context or the individual involved, it can mean different things. Traditionally, risk is characterized as having the capacity to produce harm or loss and is measured in terms of likelihood of occurrence and severity of impact. The term “risk” has its roots in an ancient Greek navigation term “rhizikon” or “rhiza,” which was a metaphor for “difficulty to avoid in the sea” (Skjong, 2005). The word “risk” comes from the French word “risque” and the Italian word for danger, “risco” (Lyon & Popov, 2020). In the 16th century, “rysigo,” a German term for business, was used meaning “to dare, to undertake, enterprise, hope for economic success” (Skjong, 2005). Risk is found in all aspects of life. In the financial world, risk can be defined as the “possibility that an outcome will not be as expected,” specifically in reference to returns on investment in finance. And within financial risk, there are many forms such as investment risk, market risk, inflation risk, credit risk, business risk, liquidity risk and others (Sraders, 2019). At an organizational level, OSH practitioners view risk derived from hazards, while production and operational managers see risk coming from operations. At the senior-executive level, a much broader view is taken to include financial and strategic risks that threaten business objectives. This is commonly referred to as enterprise risk management (ERM).

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