One simple definition of risk is that it's the "possibility of loss or injury." And that's generally how most of us think about it -- it's a bad thing that needs to be managed, minimized, and sometimes avoided all together.
While true, this recent memo by Howard Marks is a good reminder that risk is also indispensable. Or, put differently, there's risk in not taking enough risk. This is true in business and finance, but it's also true -- as Howard argues -- in chess, in sports, and in many other aspects of life:
The paradox of risk-taking is inescapable. You have to take it to be successful in competitive, high-aspiration arenas. But taking it doesn’t mean you’ll be successful; that’s why they call it risk.
By definition, it means that you will be wrong sometimes. Because if you couldn't possibly be wrong, then it wouldn't be a risk. It would be a known. And known things exist in our world in a very different way than uncertain things. Superior performance, as a gross generalization, demands uncertainty.