General Studies · Risk and Uncertainty
Which of the following best describes the difference between 'risk' and 'uncertainty' in managerial decision-making?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Risk refers to completely unknown outcomes, while uncertainty refers to known probabilities.
- 2Risk and uncertainty are conceptually and practically identical in business contexts.
- 3Risk involves scenarios with known probabilities of outcomes, while uncertainty involves scenarios where these probabilities are unknown.✓
- 4Risk is entirely qualitative in nature, whereas uncertainty can be fully modeled quantitatively.
Correct answer
Risk involves scenarios with known probabilities of outcomes, while uncertainty involves scenarios where these probabilities are unknown.
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