Which of the following BEST describes the utility of a risk?

A.
The finance incentive behind the risk

B.
The potential opportunity of the risk

C.
The mechanics of how a risk works

D.
The usefulness of the risk to individuals or groups

Explanation:

The utility of the risk describes the usefulness of a particular risk to an individual. Moreover, the
same risk can be utilized by two individuals in different ways. Financial outcomes are one of the
methods for measuring potential value for taking a risk. For example, if the individual’s economic
wealth increases, the potential utility of the risk will decrease.
Answer C is incorrect. It is not the valid definition.
Answer A is incorrect. Determining financial incentive is one of the method to measure the
potential value for taking a risk, but it is not the valid definition for utility of risk.
Answer B is incorrect. It is not the valid definition.