How is risk defined in terms of possible loss or negative outcomes?

The definition of risk in the context of possible loss or negative outcomes is inherently tied to the term "risk" itself. Risk encompasses the notion of uncertainty regarding adverse events that can lead to negative consequences or financial loss. In ORM, risk is characterized by the potential for an event to occur that can have detrimental effects, combined with an understanding of the possible impact of such an event.

The broader framework of operational risk management seeks to identify, assess, and mitigate these risks, emphasizing the interplay between likelihood and severity. However, the fundamental definition stems from the concept of risk, which is focused on the potential for loss or negative outcomes without having to dissect the contributing factors. Thus, identifying it simply as "Risk" encapsulates its essence, underscoring the importance of recognizing potential adverse events in a comprehensive risk management strategy.