Measuring Risk Two primary factors in most decisions Risk: how likely is it that something will happen? Cost: what is the cost of this course of action? Risk analysis involves defining a mathematical probability relating the likelihood of an event (adverse effect) Probability and Possibility Probability: quantitative -how likely Possibility: qualitative -if or notMeasuring Risk • Two primary factors in most decisions: – Risk: how likely is it that something will happen? – Cost: what is the cost of this course of action? • Risk analysis involves defining a mathematical probability relating the likelihood likelihood of an event (adverse effect). • Probability and Possibility – Probability Probability: quantitative – how likely – Possibility Possibility: qualitative – if or not