Define: Risk

UK Accounting Glossary

Definition: Risk

Quick Summary of Risk

The potential negative result of an event, activity, or action.

What is the dictionary definition of Risk?

Dictionary Definition

A situation involving exposure to danger.

  1. A venture, undertaken without regard to possible loss or injury.
  2. The probability of being exposed to an infectious agent.
  3. The probability of becoming infected given that exposure to an infectious agent has occurred.
  4. A source of danger; a possibility of incurring loss or misfortune.
  5. Expose to a chance of loss or damage.
  6. Take a risk in the hope of a favourable outcome.


Full Definition of Risk

Risk is the chance that an investment’s actual return will be different than expected. This includes the possibility of losing some or all of the original investment.

Explanation Of Risk

Risk is usually measured by calculating the standard deviation of the historical or average returns of a specific investment.

Many companies now allocate large amounts of money and time in developing risk management strategies to help manage risks associated with their business and investment dealings. A key component of the risk management process is risk assessment, which involves the determination of the risks surrounding a business or investment.

Market Risk

Market risk is the variability or standard deviation of the sum of the securities in any market. Market risk comes from forces (dangers) that affect all businesses – not just one company or one industry.

Market risk is also known as undiversifiable risk or systematic risk.

Unique Risk

Unique risk is the risk that can be eliminated by diversification. Unique risk is attributable to the fact that many of the risks a company can face are specific to that company and possibly its competitors. These risks are therefore minimized through diversification, which is essentially diluting the effect these risky securities may have.

Unique risk can also be called diversifiable riskresidual riskspecific risk, or unsystematic risk.


Examples of Risk in a sentence

Investors know there is a risk of losing money in any new venture, so they do quite a bit of research before committing funds to a company.
There is a risk of theft from warehouses that are left unguarded, though that is somewhat covered by property insurance.
Why risk your life?

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Risk. Payroll & Accounting Heaven Ltd. March 29, 2020
Chicago Manual of Style (CMS):
Risk. Payroll & Accounting Heaven Ltd. (accessed: March 29, 2020).
American Psychological Association (APA):
Risk. Retrieved March 29, 2020, from website:

Definition Sources

Definitions for Risk are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 15th February 2020.