Risk sharing is the practice of distributing risks amongst member‘s organizations, departments, teams or individuals. A self-insurance method of managing or reducing exposure to risk by spreading the burden of loss among several units of an enterprise or business syndicate. Risk retention pools formed with the contributions of participants are often utilized as a way to self-insure risks among multiple entities (investorwords, 2017). Risk sharing may provide opportunities for an organization to mitigate risks. For example, resource risks shared between multiple teams may provide opportunities to share resources and reduce risk. Also, risk sharing can be used as a strategy to improve the commitment of stakeholders to a project. Risk management may be preferable to risk shifting by distressed companies and institutions. The risk management strategy focuses on balancing risk and return to generate cash flow that is sufficient
to meet financial obligations, rather than taking the ―shoot the lights out‖ approach of risk (Investopedia, 2017).
Holton (2004) argues that there are two ingredients that are needed for risk to exist. The first is uncertainty about the potential outcomes from an experiment and the other is that the outcomes have to matter in terms of providing utility. Risk is a word that has various meanings to various people. It is a word that causes the feeling of urgency because it addresses detrimental, sometimes catastrophic outcomes. Risk is an important concept in a number of discipline and fields, yet there is no consensus on how it is to be defined and interpreted. Some of the definitions are based on probabilities, others on expected values, some on uncertainty and others on objectives. Some authors regard risk as subjective and epistemic, depending on the knowledge available, some regard it as aleatoric, due to the probabilistic character of certain parameters, while yet others give risk the ontological status independent from the person assessing it. Risk is the measure of probability and the weight of undesired consequences (Lawrence, in Šotić, & Rajić, 2015). Risk equals the triplet (si, pi , ci), where si is the set of scenarios, pi is the likelihood of that scenario, and ci the consequence of the scenario, i = 1, 2, ..., N (Kaplan & Garrick, 1981). Risk is a combination of five primitives: outcome, likelihood, significance, causal scenario and population affected (Kumamoto & Henley, 1996).
Risk is a situation or event where something of human value (including humans themselves) has been put at stake and where the outcome is uncertain. (Rose 1998). Risk is the expression of influence and possibility of an accident in the sense of the severity of the potential accident and the probability of the event. Risk is a combination of the probability and scope of the consequences. Risk is an uncertain consequence of an event or activity related to something of human value. Risk is the likelihood of an injury, disease or damage to the health of employees due to hazards. Risk refers to uncertainty about and severity of the events and consequences (or outcomes) of an activity with respect to something that humans value (Aven & Renn, 2009).
The definitions of risk stated are commonly used in practice. They can be categorized in several groups, in which risk is expressed: 1. By means of uncertainty and expected values 2. Through events/consequences and uncertainty; 3. In relation to objectives. Various attempts have been
made to establish a uniform viewpoint on risk, but none of them has been widely accepted in practice. This is due to various reasons. - Firstly, scientific work on risk may not have fully developed for establishing such a general definition, i.e., there still remains research to be conducted. Secondly, the scientific literature focuses on the creation of new ideas, propositions and paradigms, as well as on the criticism of other contributions. Naturally, it is difficult to reach a broad consensus on scientific matters in general, and on the definition of risk in particular. - Thirdly, organizations responsible for standardization are generally not capable of creating definitions broad and precise enough to be accepted by the scientific community (Šotić, & Rajić, 2015).
Given the ubiquity of risk in almost every human activity, it is surprising how little consensus there is about how to define risk. The early discussion centered on the distinction between risk that could be quantified objectively and subjective risk. In 1921, Frank Knight summarized the difference between risk and uncertainty thus: Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been properly separated. The essential fact is that "risk" means in some cases a quantity susceptible of measurement, while at other times it is something distinctly not of this character; and there are far-reaching and crucial differences in the bearings of the phenomena depending on which of the two is really present and operating. It will appear that a measurable uncertainty, or "risk" proper, as we shall use the term, is so far different from an un-measurable one that it is not in effect an uncertainty at all. Some definitions of risk tend to focus only on the downside scenarios, whereas others are more expansive and consider all variability as risk. Consequence in lost money, in contrast, risk in finance is defined in terms of variability of actual returns on an investment around an expected return, even when those returns represent positive outcomes.
The term business risk refers to the possibility of inadequate profits or even losses due to uncertainties e.g., changes in tastes, preferences of consumers, strikes, increased competition, change in government policy, obsolescence etc .Every business organization contains various risk elements while doing the business. Business risks implies uncertainty in profits or danger of loss and the events that could pose a risk due to some unforeseen events in future, which causes business to fail. Business risks can arise due to the influence by two major risks: internal
risks (risks arising from the events taking place within the organization) and external risks (risks arising from the events taking place outside the organization).
A risk in a business context is anything that threatens an organization's ability to generate profits at its target levels.In the long term, risks can threaten an organization's sustainability.Business risks are broadly categorized as pure risks, which are negative events over which the organization has no control, and speculative risks, which are potential effects of actions taken and choices made that may have positive and/or negative effects. Another model categorizes business risks as internal (resulting from events with the organization) and external (resulting from events occurring outside the organization).
According to security expert Harris (2016), once a business risk has been identified, an organization has four options: transfer it, avoid it, reduce it or accept it.
Risk analysis programs are designed to help an organization deal as effectively as possible with existing or potential threats. The four main elements of risk analysis are:
Identifying corporate assets and assessing their value.
Identifying vulnerabilities and threats to the security of those assets.
Quantifying the probability of those threats and their potential impact on the business.
Compare the potential economic impact of the threat versus the cost of the counter-measures required to protect the organization from it.