Understanding Risk and Calculated Risk

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Risk is when we are not certain of the outcomes in terms of doing something.

What about Risk vs Calculated Risk?

Lets try to understand these two with some examples.

Example-1

Let's suppose A wants to drive a car but he doesn't know how to drive it or never tried it before. That means he has no experience at all which could put his and other people's life in danger. This is called Risk.

But on the other hand, if A have a little bit of experience of how to drive the car, or even know how to drive the car then there is a very little possibility that you will hurt yourself or others. This is called Calculated Risk.

Example-2

Let's say B wants to cook something. But he has never tried cooking before and don't know how to cook but he is trying to cook it, then there is a Risk of the food to get spoiled.
But when B wants to cook while following the recipe which means that the meal may most probably be a good one, if not a good one then at least would be acceptable, or in some minor cases not good so it comes under the definition of calculated Risk.

Example-3

Why most of the people fail while investing in business is because they have no idea about the business where they are going to invest and blindly they invest in it just by hearing from someone or he considers it to be a good investment without even doing some research or understanding it. This is a RISK.

But on the other hand, you may have seen people, first working with a business for some time and then they start their own business and they are mostly successful. This is because they already have some experience and knowledge about the business and they know how things work therefore they took a Calculated Risk.

Crypto Investment

Let's say I have heard about a crypto from somewhere and I have invested straightaway blindly without even trying to do a little bit of research. Now, that's risky.

But when I want to invest in a crypto, first I do some research on my part, understand about the project and take the decision about investing in it. Now again, you might be saying that cryptos are unpredictable and which probably is right so in this case I would also like to add that after doing research if one has decided to invest, then they should be investing the amount of money which they can afford to lose, now I am in a position to call it a Calculated Risk.

Closing Thoughts

Taking Risk doesn't mean that you are going to lose in any case. Most probably you may get some positive outcomes. But again, the outcome is uncertain. Which is also compared to as rolling the dice.

Probably this may not be the case. One may disagree.

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