The chance of things not turning out as expected. Risk taking lies at the heart of capitalism and is responsible for a large part of the growth of an economy. In general, economists assume that people are willing to be exposed to increased risks only if, on average, they can expect to earn higher returns than if they had less exposure to risk. How much higher these expected returns need to be depends partly on the probability of an undesirable outcome and partly on whether the risk taker is risk averse, risk neutral or risk seeking. During the second half of the 20th century, economists greatly improved their understanding of risk and developed theories of risk management, which suggest when it makes sense to use insurance, diversification or hedging to change risk exposures. In financial markets the most commonly used measure of risk is the volatility (or standard deviation) of the price of, or more appropriately the total returns on, an asset. Often added to the risk profile are other statistical measures such as skewness and the possibility of extreme changes on rare occasions. (See stress testing, scenario analysis and value at risk. )