Managing financial risk

There is an element of risk in an activity when the outcome cannot be predicted with any certainty, or when the outcome is known but its full consequences are not. As individuals we have widely different attitudes to taking risks. For example, it is possible to identify three different positions. The risk lover – Someone who enjoys a gamble, even when mathematical analysis shows that the odds are unfavourable.The risk-neutral person – Will gamble only if the odds on a gain are favourable. The person…