What do you mean by risk and uncertainty? Explain the principles of risk management.

Risk and uncertainty are two important concepts in managerial economics and finance, particularly in agribusiness, where decisions are often influenced by unpredictable factors such as weather conditions, market prices, government policies, and other external factors. Both concepts represent situations where the outcome of a decision or an event is not known with certainty, but they differ in terms of how much information is available to assess them.

Risk refers to situations where the probabilities of different outcomes are known or can be estimated. It involves measurable probabilities of different scenarios happening, allowing for the possibility of managing or mitigating the impact of adverse outcomes. For example, in agribusiness, the risk associated with fluctuating commodity prices, input costs, or crop yields can be assessed using historical data, models, _______ ___ ______ ___ ___ ___.
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