Can anybody help to explain what 'educated risk' means? I recently met this phrase and need to translate it into another language. The sentence I met is 'Encouraging educated risk'. Thanks...
closed as off-topic by Kris, choster, RyeɃreḁd, tchrist♦, Kristina Lopez Mar 15 '14 at 19:32
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Educated risk is also known as informed risk. It means a risk for which the calculated potential payoff outweighs the calculated possible loss, given the knowledge one has about the circumstances. (Here is an article on informed risk.)
An uninformed risk or blind risk is one where the risks are not known and, therefore, the possible loss cannot be calculated.
An educated or more commonly calculated risk is:
a hazard or chance of failure whose degree of probability has been reckoned or estimated before some undertaking is entered upon
An educated risk is one where a person is aware of the risk involved in taking an action, understands the consequences and potential for success and chooses to take the risky action anyway. To a certain extent, it also implies that the person has taken some steps to minimise the risks where practical.
For example, crossing a road is risky. If I chose to close my eyes, and walk across the street on blind faith, that is irresponsibly risky behaviour. However, if I step to the curb, check traffic and wait until safe to cross, quickly and directly I have taken an educated risk.
Educated risk is a term that merely means you are taking a risk while knowing what that risk means.
Investing in the stock market after doing proper research is an educated risk.
Compare this to a blind risk:
Jumping off a cliff without looking what is down below is a blind risk.
Educated risk is a form of risk management. By educating yourself to the possible risks you can mitigate the potential negative effects of said risk.
In the context of Encouraging educated risk ... I presume this is either:
A mandate to take educated risks in the hopes of positive outcome. For example, investing in high-yield investments that are not guaranteed, but investor research appears extremely promising.
To minimize blind risk by being educated about the risk management consequences. For example, keeping careful documentation of conversations with patients in a medical practice.
(It would depend upon the context around it.)