If managers could have just one wish, many would ask for a crystal ball. With this tool, there would never be any worry about risk. The manager could look into the crystal ball and know exactly what will happen with each decision. Unfortunately, we do not have this luxury and must use other tools and techniques to determine the risks we face for the decisions we make. Understanding the types of financial risks will be the focus of this week’s discussion question.
In what ways do you believe the trade-off of Risk-Return might influence organization and individual investment decisions?