Risk vs. Uncertainty

Risk and uncertainty are related concepts but differ in their nature. Risk involves situations where the likelihood of various outcomes is known or can be estimated, allowing for informed decision-making. For example, investing in stocks has known potential gains and losses based on market data. Uncertainty, on the other hand, refers to circumstances where the outcomes and their probabilities are unknown, making it difficult to assess potential consequences. For instance, the impact of a new technology on the job market is uncertain because there are many unpredictable variables. Understanding this difference helps in making better choices in complex situations.