FMA-VI 2 of 2: Measures of risk and its relation to business models

Measures of risk and its relation to business models
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Risk in business is a term given to the unforeseen circumstances that may have a negative impact on the operation and success of a company. It can result from internal factors as well as some external factors in the business community. Even though negative, it’s inherent to performance. As risk is uncertain, it is prudent to learn tools of measuring risk and managing it.
Models of measuring risk give different results. Standard deviation is a model that is based on the volatility of returns. More diverse investments pose a high risk. Different deviations though give an increasing level of reliability. For instance, if the standard deviation of a stock is 21% with an annual return of 8%. You could expect an 8% percent return in this year and in any other year it could be anywhere bet...