In essence, "risk" usually refers to the obstacles to achieving the forecasted return from investment or debt repayment, although there is also a need to consider those risks that might remain with the public-sector party. But to talk just about risk is probably over-simplistic; instead, consideration should be given to identifying both the risks and the uncertainties for a given proposition. There are no precise definitions for these two factors, but for the purposes of this Report we will use the following:
• the term risks will apply to events that have a measurable probability; and
• the term uncertainties will apply to events that are indefinite.
To illustrate the difference between risk and uncertainty, Table 1 shows a possible list of factors that might fall into the risk category and those that might go in the uncertainty category. In the table, the split between risk and uncertainty has been expanded to differentiate between the impact of an event that is variable, where the impact could be positive or negative and vary over time, and the impact that is simply binary-where it either happens or not. In the case of binary events, we have assumed that the impact is negative.