Risk can be said to be anything that possesses threat to planned goals or objectives. It is worth noting that all investors must face a given level of risk in pursuing their plans. Risk events may also be seen as those events that occur without expectations in the course of operations affecting the degree of performing such operations. In such circumstances, the anomalies may negatively affect the performance of events if not controlled. From a business point of view, a risk may be seen as those factors that prevent businesses from attaining the planned goals. Although it is unforeseen, the risk is predictable using the past data. The investor also knows the level of risk to which he or she should assume. Investors assume various risk levels in operating their businesses. The three levels include risk averse, seeker and risk neutral (Dreman, 1998).
Risk seekers are those investors who engage themselves in levels which are very high in risk with expectations of high returns. In other words, such an investor, venture in very high risk investments. In circumstances where the investors are given more or less risky projects, they would prefer to choose the riskiest projects since they consider them high profitable. On the other hand, risk neutral investors are those investors who lie at the extremes implying that do not pay extra to get involved in any form of risk (Dreman, 1998). They keep the status quo and assume that business will run as per plans then. In an event of risks occurring, they do not have any contingency plan to improve them. Finally, risk averter is an investor who ventures in less risky businesses. In circumstances where such investor is put into more or less risky investments, the investor would choose the less risk investment.
References
Dreman, D. N. (1998). Contrarian investment strategies: The next generation: Beat the market by going against the crowd. New York, NY: Simon & Schuster
