Risk, Uncertainty and Possible Worlds

Risk is an important and ubiquitous concept that plays a crucial role in decision makings across domains. Risk is also a vague notion that carries different meaning under different domain context and perspectives. This paper aims to provide a formal generalised definition of risk based on the possible world paradigm and expected utility theory and the meanings of risk from both qualitative and quantitative level. This definition of risk is developed from the perspective an intelligent agent or information system. It provides a solid theoretical foundation upon which we can construct an intelligent generalised risk modelling and management framework using techniques from Artificial Intelligence research. This framework can be implemented as an integral part of an information system for better decision support and management of businesses.