You may need to be aware of the distinction between uncertainty and risk.The Oxford Reference Dictionary defines risk as ‘The possibility of meeting danger or suffering from harm or loss.’The Merriam Webster Dictionary defines uncertainty as "indefinite, indeterminate” and "not known beyond a doubt."In his PhD thesis ’About Risk and Profits’, Knight (1921) tries to make a distinction between risk and uncertainty. “It will appear that a measurable uncertainty, or "risk" proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all. We shall accordingly restrict the term "uncertainty" to cases of the non-quantitive type.” (Knight, 1921, paragraph I.I.26)Thefore, it is evident that attributing the term risk to the uncertainty of future economic outcomes is potentially inaccurate and often misleading. Knight sets out to study (amongst other things) this distinction as follows: 1. With the case of risk, the probabilities that certain events will occur in the future are measurable and therefore precisely known, i.e., there is randomness but with measurable probabilities. This can be further distinquished into: • a priori risk, for example, the outcomes of the toss of a fair coin; and• estimable risk, where the probabilities can be estimated through statistical analysis of past experience, for example, the probability of a fire in a particular factory in the next year. 2. In the case of uncertainty, the probabilities of future events are indefinite or incalculable. This is because the situation dealt with is too irregular or to a high degree unique, for example, the likelihood of success of a brand new product. The realm of risk is therefore one of measurable uncertainty (randomness with measurable probabilities), which is the focus of QF, whereas uncertainty is the unexpected and unquantifiable risk. which can be dealt with stress testing. Hence, risk entails not only an estimated possibility of loss, it also entails the uncertainty of loss. Practically, this means that you may need to think not only about the probable but also about the improbable.