In the corporate world, the term “risk” is subject to very different interpretations. Similarly, in a scientific context, the concept of risk is also interpreted differently depending on the respective field of research.
While researching “risk” from a business management reference, a general distinction can be made between two definitional trends: cause-related vs. effect-related approaches (cf. Braun 1984, Fiege 2006). While cause-related definitions understand risk as the result of an uncertain future situation, impact-related approaches consider the effects that the occurrence of a risk has. Knight (1921), as a representative of the cause-related camp, defines risk as a quantifiable and thus measurable uncertainty.
One of the primary aspects of the effect-related risk perspective, is the risk of loss associated with specific individual actions. In this context, Leitner (1915, p. 7) describes risk as a “direct and indirect asset portfolio of losses and asset expenditures”, while Wittmann (1959, p. 36) defines risk generally as a “failure of plans”. All effect related approaches therefore interpret a risk as a “possibility of failing to achieve a goal” (Braun 1984, p. 23).
Following this logic, however, no distinction would be made between negative and positive (as relating to corporate goals) failures, which Kupsch (1973) offers as a major critique of this approach.
The importance of the distinction between “risk” and “opportunity” is highlighted when the terms are employed in context both in literature and in practice. March and Shapira (1987), for example, demonstrate in an empirical survey that in practice “risk” is understood as failure to achieve a goal and an opportunity as the achievement or positive fulfilment of a goal. From their study they also derive a definition of risk, which is used as a baseline in this article: the product of the probability of occurrence of a negative event and the expected amount of damage.
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