Introduction

Have you ever wondered what a completely certain world would look like? A world where you do not have to check the weather forecast daily to decide what to wear, or wonder what major to choose in college to enhance your earnings, life satisfaction or career success? A world where fortune plays no role because you will know exactly what the consequences of every action that you take are and the causes that influence every outcome? Would you like to live in a world of complete certainty?

Risk is an inherent feature of the world we live in. We do not know with certainty what job we will land upon completing our education, whether we will be involved in a car accident on a given day or whether our investment in stocks will increase in value during our investment horizon. Risk is a fundamental concept in insurance, investments and decision making. How do we take risk into account when making informed decisions? In Module 1 of this course, we will start by defining and quantifying risk. In future modules, we will focus on decision making in the absence and presence of risk.