Alternative definitions of "Risk"
A number of definitions of risk are currently in use and are reflected below which can be useful in assisting the institution to define risk within its own context:
COSO ERM Integrated Framework
"Risk is the possibility that an event will occur and adversely affect the achievement of objectives."
COSO - The Committee of Sponsoring Organizations of the Treadway Commission
The King II Report on Corporate Governance for South Africa
"Risk can be viewed as the possibility of something happening that will have an impact upon the achievement of the company's objectives. It is measured in terms of likelihood and consequences. Adverse risks are events that threaten the assets or earnings of the company, or have the potential to disrupt or end essential operations."
King II Report on Corporate Governance for South Africa
The Combined Code (United Kingdom)
"Risk can be defined as real or potential events which reduce the likelihood of achieving business objectives. Or, put another way, uncertainty as to the amounts of benefits. The term includes both the potential for gain and exposure to loss."
The Combined Code on Corporate Governance June 2006
The Institute of Risk Management
"The uncertainty of an event occurring that could have an impact on the achievement of objectives. Risk is measured in terms of impact and likelihood."
Institute of Risk Management South Africa Code of Practice
The Institute of Internal Auditors
"The possibility of an event occurring that will have an impact on the achievement of objectives. Risk is measure in terms of impact and likelihood."
The Institute of Internal Auditors Professional Practices Framework January 2004
From the above, it is clearly evident that risk is an event, potential or real, that could have an impact on the institution achieving its objectives. It is also apparent that risk is measured in terms of impact and likelihood.