Safety Margin
A "Safety Margin" refers to the difference between the actual performance of a system and the minimum required performance needed to ensure safety. It is commonly used in engineering, finance, and health to provide a buffer against unexpected failures or adverse conditions. For example, in construction, a building might be designed to withstand loads greater than those it will typically encounter.
In finance, a safety margin can refer to the difference between the intrinsic value of an investment and its market price. This concept helps investors make informed decisions by ensuring they have a cushion against potential losses. By maintaining a safety margin, individuals and organizations can better manage risks and enhance overall stability.