Marginal-risk

Marginal-risk refers to the potential for loss or adverse outcomes associated with an investment, activity, or decision where the added benefits are considered comparatively small and the possibility of undesirable consequences is present. It suggests that taking on additional risk yields little extra reward, making it a less attractive proposition than endeavors with higher potential returns relative to their risk profile. The term often implies a careful evaluation where the incremental downside needs to be weighed against the incremental upside before proceeding. Assessing marginal-risk involves analyzing the sensitivity of the outcome to variations in key factors and quantifying potential losses, compared to overall gains.

Marginal-risk meaning with examples

• Investing in that new tech stock offered only marginal-risk, as its growth prospects were uncertain, and the gains would only be modest even with success. Investors sought more stable returns elsewhere.
• Taking on that new client, despite the small revenue increase, carried marginal-risk of reputational damage due to their questionable practices. It was a cost-benefit analysis.
• The company considered the marginal-risk of extending the product line; the expected additional profit was minimal, and potentially damaging if not fully successful. Careful review was required.
• Choosing the high-stakes option, that had marginal-risk of not meeting the deadline with the high reward for the first-to-market, requires careful consideration due to potential for failure.
• Implementing a new marketing campaign with a marginal-risk of a slight budget overspend needs to be evaluated against the potential increase in customer acquisition and resulting long-term profit.