Mr. Brown is a fisherman. He goes fishing every day. To catch more fish, he will travel deep into the sea. The risk of facing stormier weather will likely increase at sea. Cresting the waves at the crack of dawn to get the best catch, that is what Mr. Brown’s life is all about.
There are days when he is blessed with plenty of fish, but on other days he returns empty-handed. So, Mr. Brown has to plan ahead and be prepared for all possible outcomes.
What is risk?
Risk is the possibility of something bad happening. It implies future uncertainty about deviation from expected earnings or expected outcome.
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