Final answer:
The best definition of risk level is a combination of the probability of an undesirable event happening and the expected impact of that event, which includes considerations such as financial losses and wider implications.
Step-by-step explanation:
The main answer to the question of which statement best defines risk level is option C: Risk level is determined by a combination of the probability of an undesirable event and the expected impact of that event. This definition encompasses not only the likelihood of occurrence but also the consequences that would follow, which can extend to financial losses, environmental damage, social and economic impacts, public health issues, and more. Understanding risk is essential for various applications, ranging from investments and finance, where it pertains to the uncertainty of a project's profitability, to public health and safety, where it involves the potential impact of catastrophic threats.To explain in more detail, when assessing risk level, one must consider both the probability, which is a measure of certainty regarding outcomes, and the impact, which can vary greatly based on the event in question. For example, in finance, a high-risk investment has a broad range of potential payoffs, which can lead to returns much higher or lower than the expected rate of return. Conversely, a low-risk investment often has actual returns closely aligned with expected outcomes. In both cases, the notion of risk incorporates the expected variability and potential consequences of an event, not simply the sum of possible negative outcomes.In conclusion, the risk level captures the essence of uncertainty in any endeavor and guides decision-making appropriately, whether it is through the formulation of contingency plans, purchasing insurance, or selecting an investment strategy.