4. Understanding the Meaning of Risk: An Introduction

Welcome to Chapter Three: Defining Risk

Hello everyone, and welcome to chapter three of this course, where we delve into the meaning of the word “risk.” Today, we will define the term in general terms. However, before we dive in, I would like you to participate in a brief exercise. This will help you better grasp the concept of risk. Please pause this video after I ask the question and take a moment to complete the task.

Initial Exercise: Personal Definition of Risk

Take a piece of paper and a pen. Write down what the word “risk” means to you. You can define it with an example, an idea, or any explanation that you believe is correct. This exercise is crucial for your understanding of the term. Later, we will compare your definition with the one we discuss in this lesson.

Now, please pause this video and complete the task by writing down your thoughts on the word “risk.”

Examples of Risk

I hope you’ve taken a moment to write down your thoughts. You might have come up with various examples or ideas. That’s excellent! Keep that piece of paper nearby. We will now look at some specific examples of risk that I have chosen from our previous class.

Consider these scenarios:

• Losing your cell phone
• Getting wet because you didn’t bring an umbrella on a rainy day
• Missing a bus and being late

Focus on these examples and think about what they have in common. Also, keep in mind what you wrote on your paper. What is the common outcome in all these scenarios?

Defining Risk: A General Approach

In all these examples, the outcomes are undesirable events—something bad or dangerous that we don’t want to happen. Based on this, we can formulate a general definition of the word “risk.”

General Definition of Risk

Risk is the possibility of something bad or undesirable happening.

You can write down this general definition. However, it is important to note that this is not a professional definition. It is a basic definition that can be used to explain the concept to a friend, someone who is not a professional, or a client who is new to insurance.

When to Use This Definition

While this general definition is useful for initial understanding, it should not be used in professional or corporate settings. As we progress in this course, I will teach you the technical definitions of risk that are appropriate for professional contexts.

Conclusion

We have reached the end of this class. If you have any questions, please feel free to contact us. I am happy to answer any queries you may have. Thank you for your attention, and I look forward to seeing you in the next lesson.

Bye for now!