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Life is brim-full of risks, some of which we take happily and some of which we are thrust into. In any case handling risks is a part of our life. None of us are untouched by this aspect of our life in most components of our life. The key to understanding and minimising negative aspects of the risks we are facing is to understand when taking a risk is correct and when taking a chance can be foolhardy. This topic does not cover risks that are inadvertently thrust on us, but those we decide to take.

This is the meaning of risk which has been given: Risk is the chance that a selected action or activity (including the choice of not doing anything) that might end up in negative result. When you decide to do or not do something understanding that the result might not be good, that is often known as gambling.

Risks can be broadly categorized into two categories:

- Hopeful risks: These are risks that you take, without knowing the likely factors that have an effect on the result and even if you do know, you've got no control over any one of these factors. That implies you are taking a chance wishing that the result would be in your favour.
- Calculative risks: These are risks where you have punctiliously studied all the factors. Based primarily on your calculations, the likelihood of a result in your favor is more, then it would come under the purview of calculated risks.

A very good demonstration of how to differentiate between worked out risk and speculative risk, would be an easy game of Indian rummy :

- Hopeful risk in rummy: You are playing a game with a grouping of folk on the internet. The other players playing Indian Rummy Online are absolutely unknown to you. The cards are dealt to all. You get a glimpse of the cards you hold. You find that the majority of the cards you hold are no use in forming a sequence. You have got no jokers. All of the cards you hold are deadwood cards with very high points. The stakes for the game you are playing are truly high. Losing the game would imply a terrible loss to you. You have got no idea what cards other players have. You have no way of taking a look at the reaction on their faces to glean the cards they hold. The game offers the option to drop by incurring nominal points. A hopeful risk at this juncture will be to continue playing the game on the presumption that others too have unfavorable cards or wishing that the cards you pick from the open/closed pile will make the hand you hold better.
- Calculative risk in rummy: Now imagine a scenario where again you are playing 13 cards rummy online with a bunch of unfamiliar players. The cards you hold in hand are not great but have the potentiality to be melded into something promising. You are the person placed to play first and the open card is either a joker or a card that will complete a natural sequence or you have got a couple of joker cards in hand. Additionally the deadwood cards in hand do not sum up to a very high score or the stakes of the game are very low. In such a case proceeding with the game with the presumption that it is easy to win or at the least minimise losses, is a calculated risk.

This easy game of Indian rummy obviously defines the greatest difference between a calculative risk and a hopeful risk. Same goes for managing yourfinance. When you are in financial need, always work out your sums first before lending. If you don't, and not know all the terms behind it, the same thing can have a very different effect and be a hopeful risk to you!