What is Risk? - Marketing risk management

Risk often has negative connotations. Interestingly enough, there is opportunity in risk. When businesses conduct risk assessments, there is often an aura of avoidance. For example, what to do if X or Y goes wrong and how to handle it—how to avoid X or Y. Risk consists of the uncertainty surrounding a condition or event that can have positive or negative effects on an initiative (Weaver, 2008).

The building blocks of risk consist of: 

• Uncertainty v Variability

• Accuracy v Precision

• Chance v Probability 

• Normal distribution curves

• Standard deviations

(Weaver, 2008)

Risk in marketing is perceived as the possibility of generating losses ( Deng & Ahmad, 2022). This definition has two sides - losses by action or lack of action. There is an opportunity within the lack of action, whereas action with potential losses requires a mitigation strategy.  In marketing, losses can be experienced through ineffective projects or not taking on a project (opportunity loss) - failing to take the proper action to reach the target. Check out our article, How Do You Manage Risk, to learn how to manage risk.

Deng, C., & Ahmad, M. T. (2022). Research on Marketing Management Risk Decision Model Based on LINEST Function. Security and Communication Networks, 2022, 1–10. https://doi.org/10.1155/2022/9658148

Weaver, P. (2008). The meaning of risk in an uncertain world. Paper presented at PMI® Global Congress 2008—EMEA, St. Julian's, Malta. Newtown Square, PA: Project Management Institute.