Risk Event

A Risk Event is a potential event that results from uncertainty realization of measurable consequences (value (whether gain or loss) under specific circumstances.

• Context:
  • It can range from being a Mild Risk Event to being a Wild Risk Event, based on probability distribution patterns.
  • It can range from being a Natural Risk Event to being a Manufactured Risk Event, based on risk origin.
  • It can range from being a Measurable Risk Event to being a Knightian Uncertainty Event, based on quantification capacity.
  • It can range from being a Downside Risk Event to being an Upside Risk Event, based on value impact.
  • ...
  • It can be represented in a Risk Representation.
  • It can manifest through Risk Patterns such as:
    • Systematic Risk Patterns following statistical regularity
    • Fat-Tailed Risk Patterns with extreme event potential
    • Cascading Risk Patterns with interconnected effects
  • It can be perceived through Risk Perception Dimensions:
    • Dread Dimension: degree of fear and catastrophic potential
    • Unknown Dimension: degree of familiarity and scientific understanding
    • Exposure Dimension: number of people or assets affected
  • It can be analyzed through Risk Assessment Approaches:
    • Qualitative Assessment: using expert judgment and descriptive analysis
    • Semi-Quantitative Assessment: using risk matrix and rating scales
    • Quantitative Assessment: using probability and consequence calculations
  • It can be characterized by Risk Metrics:
    • Expected Value: probability × consequence
    • Volatility Measures: variance and standard deviation
    • Risk Triplets: (scenario, probability, consequence)
  • It can be influenced by Decision Making Factors:
    • Bounded Rationality: limits on information processing
    • Framing Effects: impacts of problem presentation
    • Risk Attitudes: risk aversion vs risk seeking
  • It can trigger Risk Response Strategys:
    • Technical Responses: control implementation
    • Management Responses: process modification
    • Social Responses: stakeholder communication
  • ...
• Example(s):
  • Organizational Risk Events, such as:
    • For-Profit Organization Risk Events:
      • Property Right Risk Events, such as ... and ....
      • Corporate Financial Risk Events:
        • Investment Risk Events: portfolio loss and market volatility
        • Capital Structure Risk Events: leverage issue and liquidity crisis
        • Revenue Risk Events: sales decline and margin compression
      • Corporate Operational Risk Events:
        • Production Risk Events: quality defect and capacity constraint
        • Supply Chain Risk Events: supplier failure and logistics disruption
        • Resource Risk Events: talent shortage and material scarcity
      • Corporate Strategic Risk Events:
        • Market Position Risk Events: competitive threat and market share loss
        • Growth Risk Events: expansion failure and acquisition risk
        • Innovation Risk Events: technology obsolescence and R&D failure
    • Contract-Related Risk Events:
      • Contract Formation Risk Events:
        • Negotiation Risk Events: term ambiguity and power imbalance
        • Documentation Risk Events: drafting error and omission risk
        • Approval Risk Events: authorization failure and signatory issue
      • Contract Performance Risk Events:
        • Delivery Risk Events: delay risk and quality shortfall
        • Payment Risk Events: default risk and pricing dispute
        • Compliance Risk Events: regulatory violation and standard breach
      • Contract Management Risk Events:
        • Monitoring Risk Events: oversight failure and reporting gap
        • Change Risk Events: scope creep and requirement shift
        • Relationship Risk Events: communication breakdown and trust erosion
  • Professional Practice Risk Events:
    • Financial Risk Events:
      • Market Risk Events: price change and rate fluctuation
      • Credit Risk Events: counterparty default and rating downgrade
      • Liquidity Risk Events: funding shortage and asset illiquidity
    • Operational Risk Events:
      • Process Risk Events: system failure and human error
      • Technology Risk Events: IT disruption and cyber attack
      • People Risk Events: staff turnover and skill gap
  • External Risk Events:
    • Environmental Risk Events:
      • Natural Risk Events: natural disaster and climate event
      • Human-Induced Risk Events: pollution incident and resource depletion
    • Market Risk Events:
      • Economic Risk Events: recession and market crash
      • Industry Risk Events: sector decline and structural change
    • Political Risk Events:
      • Regulatory Risk Events: law change and policy shift
      • Geopolitical Risk Events: trade restriction and political instability
  • Emerging Risk Events:
    • Systemic Risk Events: financial contagion and network failure
    • Technology Risk Events: digital disruption and automation impact
    • Societal Risk Events: demographic shift and social change
  • ...
• Counter-Example(s):
  • Pure Uncertainty Events without measurable probability
  • Certain Outcome Events without uncertainty element
  • Value-Neutral Events without gain or loss potential
  • Routine Processes with established controls
  • Planned Changes with managed uncertainty
• See: Risk, Uncertainty, Value, Decision Theory, Risk Management, Risk Analysis, Probability Theory, Expected Value, Risk Perception, Risk Society

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[References section retained but needs expansion with new academic sources]