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Books > Reference & Interdisciplinary > Communication studies > Decision theory > Risk assessment
Risk, Uncertainty, and Profit is a groundbreaking work of economic
theory, distinguishing between risk, which is by nature measurable
and quantifiable, and uncertainty, which can be neither be measured
nor quantified. We begin with an analysis of the functions of
profit, risk and uncertainty in the economy. Frank H. Knight
introduces his work with a discussion on profit and how there are
conflicts about its nature between various economic theorists. As
the title implies, the author's chief concern is the interplay
between making a profit, incurring risk, and determining if there
is uncertainty. Risks are different from uncertainty in that they
can be measured and protected against. For example a location
chosen for a factory or farm may have a measured risk of flooding
in a given year. Businesses, insurers and investors alike can be
made aware of this, and behave according to the quantified risk.
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