Risk criteria is a term that has been used for many years in the Risk Management field. These criteria are guidelines designed to help Managers assess the risks they face on potential investment opportunities. They can be used to identify potential hazards and threats before they have a chance to occur. It is typically expressed as follows:
– The risk of an investment opportunity should not exceed the return on the investment
– All investments have some degree of risk associated with them, so it’s important to be aware of your tolerance before making any investments. Risk Criteria, therefore, is a way to measure the risk of an investment opportunity relative to the possible return on that same investment.
In Risk Criteria, there are three main categories: Assessment, Control, and Communication. Risk is a measure of how likely it is that an unwanted event will happen in the future.