From a corporate risk management perspective, we use "risk" to describe probable events which need to be managed (by internal management decision-making, outsourcing to a 3rd party, insuring etc). It is not that "we don't like risks", but rather that we recognise things that can go wrong, from our own experience of that of others, and the need to anticipate and manage those risks. Risks can be known or unknown as to probability and/or consequence, where unknown would include black swan risks (Taleb 2007). Then we can usually model them using ISO31000 risk matrices or Monte Carlo which forms a basis for debate at board level as to how resources get allocated to the most consequential risks.

We use the term "challenges" differently, typically where we know what we have to do (such as manage one of the risks identified above) but there are obstacles that need to be overcome, such as budget constraints, a difficult third party to deal with or a need for more research to understand the risk better.

Having said that, I suspect you are right that the terms "risk" and "challenge" are used differently outside the risk management profession in that "risk" has a negative connotation while "challenge" has a positive, perhaps macho, connotation. So the context in which the terms are being used will therefore need to be defined, as it may be that some groups within the organisation use the terms with different underlying assumptions as to their definition and their emotive connotation.

Dear Mr. Christopher C Kelly

Thank you very much for extensive and inspiring answer! I am risk manager myself, so I use word risk at least hundred times every day, but I used to hear word challenge instead of risk at some high level meetings. I suppose that word challenge is just more sexy nowadays.

In civil engineering, all infrastructure is designed at an acceptable level of risk. Acceptable risk is often incorporated taking into account the consequences of structural failure in association with cost implications, and specifying (or assuming (often wrongly)) that acceptable levels of maintenance will be maintained during the design period. Hence, in this scenario, "risk" is defined and determined through a statistical evaluation (often not even contemplated by the designer who will normally use pre-determined "safety" factors) of the probable consequences of the design to achieve an acceptable risk profile associated with the type of infrastructure, environment, etc. The risk profile will normally assume the implementation of asset management systems with associated regular condition evaluations to enable periodic maintenance to be cost-effectively done in order to keep the integrity of the infrastructure in place.

In civil engineering, the two concepts can not be interchanged. Design is done at the acceptable risk and the challenge is for engineers (especially new entrants into any field of civil engineering) to understand the concept of risk associated design in order to maximise service delivery in terms of macro infrastructure needs giving the reality of limited funds in most countries. In addition, the challenge is to get decision-makers to prioritise the essential implementation of asset management systems to ensure that the risk profile for the infrastructure in question is not compromised (understanding of risk associated limitations of the provision of cost-effective infrastructure together with the challenges of routine and periodic maintenance needs).

This is another GREAT example of why ALL 'important' terms in any language MUST be carefully defined by the user for the audience!!! NEVER assume that their definitions or viewpoints are the same (even when they are nodding their heads). Even if there are differences, ensuring that your audience knows how YOU define the words you use will facilitate understanding and discussion.

When someone uses a word in a context that you think is inappropriate, ask them politely to define exactly what they mean by the use of that word, in that context. Clarity of communication may be more important than the communication itself for social and business progress. Even within "Risk Management" professions (I am one) we find that the specific definitions of risk levels can vary between corporations or organizations, even when they attempt to follow a particular Standard.

Dear Mr. Gerrit Jordaan, thank you for very useful insight in civil engineering risk management process as well as usage of terms 'risk' and 'challenge' in that area.

Dear Mr. Steven Cooke

You made an excellent point! We need common understanding of terms before we start with the project, so defining taxonomy is always the most important thing at the beginning.

Dear Rajko Sekulovic

Yes, and it is even more important to do so when we (as members of a particular professional group) interact with the general public, as is usually the case in civil engineering projects. Holding ourselves and also politicians accountable for what they mean to the public is the first step of obtaining and maintaining the public trust in our endeavors.

Risk provides opportunities and challenges in finance. Risk is rewarded when taken correctly and penalized if not. Taking more risk is associated with a higher expected return in finance.

The most important difference is uncertainity. Because the challenge occurse with accpetance. Risks are various. Most of them cannot be prevented. The companies or people can only be prepared. But the challenge is taking action where individuals or companies are strong and have skills to deal.

Every enterprise carries some kind of risk. There is no activity, entrepreneurship, etc. without risk. New types of activities can create new risk categories. However, people take risks and discover new issues, new innovative solutions are created, inventions, patents, discoveries, new scientific research results, new types of technologies, products, services are created, etc. It is important to skillfully improve the issue of risk management in order to assess the level of risk to quantify the risk to determine the optimal, acceptable level of risk for the specific activity people undertake. The key issue is to improve risk management.

Regards,

Dariusz Prokopowicz

The nouns 'risk' and 'challenge' are not really compatible, I think.

The word 'challenge' is often used because it sounds less negative when compared with the word 'problem'. Any currently existing situation that is approached as a 'problem' has less motivating appeal than when presented as a 'challenge'.

Risk is basically a hypothesis about the outcome of a future event. If the event is associated with financial gain or loss, one could speak of a 'challenge' with respect to predicting the risk's outcome.