What is Risk? Explain the various types of risk a business enterprise is exposed to, with examples.

Nirmal Ltd. has an investment proposal, requiring an outlay of Rs. 40,000/-. The investment proposal is expected to have 2 years economic life with no salvage value. In year 1, there is 0.4 probability that cash inflow will be Rs. 25,000/- and 0.6 probability that cash inflow will be Rs. 30,000/-. The probabilities assigned to cash inflows after tax for the year are as follows: Cash inflow in year 1 Rs. 25,000/- Cash inflow in year 2 Probability 12,000/- 16,000/- 22,000/- 0.2 0.3 0.5 Cash inflow in year 1 Rs. 30,000/- Cash inflow in Probability year 2 20,000/- 25,000/- 30,000/- 0.4 0.5 0.1