Risk can be controlled if proper measures are taken to control it.The potential outcomes are known in risk, whereas in the case of uncertainty, the outcomes are unknown.Conversely, it is not possible to measure uncertainty in quantitative terms, as the future events are unpredictable. Risk can be measured and quantified, through theoretical models.Uncertainty is a condition where there is no knowledge about the future events. The risk is defined as the situation of winning or losing something worthy.The difference between risk and uncertainty can be drawn clearly on the following grounds:

Key Differences Between Risk and Uncertainty Therefore, probabilities cannot be applied to the potential outcomes, because the probabilities are unknown.

Uncertainty cannot be measured in quantitative terms through past models. Hence, it is hard to define or predict the future outcome or events. This is because of insufficient information or knowledge about the present condition. It refers to a situation where there are multiple alternatives resulting in a specific outcome, but the probability of the outcome is not certain.

Unsystematic Risk: Business Risk and Financial Risk.īy the term uncertainty, we mean the absence of certainty or something which is not known.

Systematic Risk: Interest Risk, Inflation Risk, Market Risk, etc.

The major elements of risk are defined as below: Although the higher the risk, the higher is the expectation of returns, because investors are paid off for the additional risk they take on their investments. Such a risk may include the probability of losing the part or whole investment. the probability of actual returns may not be equal to the expected returns. It implies the uncertainty regarding the expected returns on the investments made i.e. In the financial glossary, the meaning of risk is not much different. It is termed as a chance or loss or exposure to danger, arising out of internal or external factors, that can be minimised through preventive measures. In the ordinary sense, the risk is the outcome of an action taken or not taken, in a particular situation which may result in loss or gain.

Macro definition of uncertainty