High Risk
Overview
High risk (高危險, high risk) refers to a state in which the magnitude of loss that an event or decision can cause, and the likelihood of that loss occurring, significantly exceed ordinary levels. Risk is typically conceptualized as 'probability of occurrence × scale of loss,' and high risk denotes the domain in which this value exceeds an acceptable threshold and therefore requires a separate management, regulatory, and compensation system. Operational definitions and grading systems differ by field—financial investment, healthcare, industrial safety, AI regulation, and others—but all commonly presuppose the risk management cycle of 'ex-ante identification → grade classification → mitigation measures → ex-post monitoring.'
Main Content
Measurement and Grading of Risk
The first step in dealing with risk is measurement. In finance, volatility, maximum drawdown (MDD), credit ratings, and VaR (value at risk) are used, while in industrial safety, risk estimates calculated by multiplying frequency and severity are used. In regulatory practice, risks are commonly divided into four to five grades (e.g., very low to very high), and those falling into the high-risk grade are subject to additional approval, sign-off by higher-level decision-makers, and strengthened disclosure obligations. The core of grading is 'consistent treatment of identical risks' and 'clarification of where responsibility lies.'
High Risk in Finance and Investment
In finance, high risk refers to categories of products with a high possibility of principal loss and 剧烈的 price fluctuations. Representative examples include below-investment-grade bonds (junk bonds), leveraged and inverse ETFs, over-the-counter derivatives, virtual assets, and unlisted stocks. The principle of high risk, high return is a basic assumption of asset pricing theory, in which expected returns reflect a risk premium. From the perspective of consumer protection, the suitability and appropriateness principles, duty to explain, delivery of investment prospectuses, cooling-off systems, and recording obligations are applied intensively to high-risk products. Sellers must confirm investors' investment objectives, financial status, and investment experience, and violations give rise to liability for incomplete sales.
High Risk in Healthcare and Public Health
In healthcare, cases in which the patient's condition or the procedure itself carries a high degree of risk are classified as high risk. High-risk pregnancies (gestational diabetes, preeclampsia, risk of preterm birth or placenta previa, etc.) are designated for intensive management, with regular examinations and linkage to delivery infrastructure, and high-risk newborns are managed in neonatal intensive care units (NICUs). In preoperative assessment, high-risk patients are identified using classifications such as the American Society of Anesthesiologists (ASA) physical status classification, and anesthesia and surgical plans are adjusted accordingly. In the field of infectious diseases, facilities handling high-risk pathogens at the BSL-4 level are subject to separate permits and safety management standards.
Industrial Safety and High-Risk Work
High-risk work at industrial sites refers to processes that can lead directly to fatal accidents, such as entry into confined spaces, hot work and welding, work at heights, lifting of heavy objects, and de-energized or live-line work. The standard is to identify high-risk processes through risk assessments and apply work permit systems, assignment of supervisors, wearing of protective equipment, and the right to stop work. Since the enforcement of the Serious Accidents Punishment Act, the safety and health assurance obligations of management executives have been emphasized, and building a safety and health management system that documents the list of high-risk work and control procedures has become a de facto mandatory requirement.
High Risk in AI Regulation
The EU Artificial Intelligence Act (AI Act) classifies AI systems on a risk basis and imposes on high-risk AI obligations of conformity assessment, technical documentation, data governance, logging, human oversight, and post-market monitoring. Medical devices, recruitment and HR evaluation, credit scoring, management of critical infrastructure, and evaluation in education and vocational training are cited as examples of high-risk categories. Korea is also reorganizing its system in the direction of introducing transparency and impact assessment obligations for high-impact AI through the Framework Act on AI (Framework Act on the Development of Artificial Intelligence and the Creation of a Trust Basis).
Latest Trends
The changes of 2024–2025 can be summarized in three strands. First, as high-risk assets were repriced amid high interest rates and high volatility, regulation of high-risk investment products was strengthened, including the enforcement of the Virtual Asset User Protection Act (July 2024) and discussions on second-stage legislation. Second, as the EU AI Act took effect in August 2024 and is being applied in stages, the definition of high-risk AI and the conformity assessment system are becoming a global standard, and Korea's Framework Act on AI, ahead of its entry into force in January 2026, is also in the process of establishing standards for high-impact AI. Third, as the Serious Accidents Punishment Act was fully applied to workplaces with fewer than 50 employees starting in January 2024, risk assessments for high-risk work and work permit procedures spread to small and medium-sized workplaces. In addition, movements to incorporate climate and supply chain risks into high-risk classification, and changes in health policy such as expanding essential medical delivery infrastructure and support for high-risk pregnancies, are also under way.
Related Topics
- [[Risk Management]]
- [[High-Risk AI]]
- [[Serious Accidents Punishment Act]]
- [[Virtual Assets]]
- [[Risk Assessment]]