Bridge over ocean
1 November 2004 Financial Analysts Journal Volume 60, Issue 6

Defining Risk

  1. Glyn A. Holton

The financial literature frequently mentions risk, but it lacks a widely accepted definition of risk. This omission is no coincidence. Risk is an intuitive notion that resists formal definition. Adopting a largely historical perspective, this article draws on ideas that emerged during the 20th century and uses them to formalize specific limits to our ability to ever define the notion of risk. In doing so, it offers insights into the nature of risk.

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