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Risk is defined as "A possibility of incurring loss or misfortune". So that means it doesn't always happen, which implies that it will happen a certain percentage of the time. This percentage is also known as the probability of it occurring, which means if you know the probability of the risk happening you can do a lot of things with it, such as find the expected value of the risk :)
If you were just told that it was possible that your house would burn down tomorrow, you wouldn't know what to expect, because you don't know the probability of this happening, but if you're told that something will happen with a 50% or even an 80% probability, you'll take the event more seriously.
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What is the relationship between the probability of a simple event and its complement?
If the probability of an event is p, then the complementary probability is 1-p.
What is the difference between risk and exposure?
An exposure consist of the potential financial effect of an event multiplied by its probability of occurrence and risk is with probability of occurrence. Thus an exposure is a risk times its financial consequences.
Is there a direct relationship between the power of a test and the probability of a Type II error?
The power of a test is 1 minus the probability of a Type II error.
What is the relationship between conditional probability and the concept of statistical independence?
If events A and B are statistically indepnedent, then the conditional probability of A, given that B has occurred is the same as the unconditional probability of A. In symbolic terms, Prob(A|B) = Prob(A).
What is the relationship between statistics and probability?
Probability is used to answer questions in the category of Statistics. Probability is a basic statistic that gives numeric value to the questions; Will a specific event occur? or How certain are you that it will occur. Probability of rolling a 3 on a 6-sided die is 1/6.
