A township board calls every rainy-day delay a "hazard" and every unpaid invoice a "risk" interchangeably. Which clarification should the risk manager give?
Select an answer to reveal the explanation.
Short Explanation
Picture a wet floor versus the chance someone actually slips and gets hurt. The puddle is the hazard — the source of potential harm — and the chance it derails your objectives is the risk. Mixing those labels makes it harder to decide what to treat and why.
Full Explanation
In corporate risk management, a hazard is a condition or source that can cause harm, such as weather that delays work or unsafe equipment. Risk is the effect of uncertainty on objectives — typically expressed through likelihood and consequence relative to what the organization is trying to achieve. Treating rainy-day delays and unpaid invoices as interchangeable labels blurs identification and treatment; clarifying hazard versus risk keeps the board focused on sources of harm and on how those sources threaten goals.