Across town, however, suppose another person is also heading to the airport to catch the same flight. This person has called ahead and confirmed that the flight is not canceled. Accordingly, she has less uncertainty and faces lower risk. In this example, there are two individuals exposed to the same event. Because they have different levels of uncertainty, they face different levels of risk.
Risk is subjective.
Some of the most significant risks which organizations face are highly subjective. A bank can reduce its credit risk by getting to know its borrowers. A brokerage firm can reduce market risk by being knowledgeable about the markets it operates in. In financial applications, quantitative models are often used to try to give objective estimates of risk. Examples include the Capital Asset Pricing Model and value at risk models.