Adaptive decision-making requires consideration of objective risks and rewards associated with each option, as well as subjective preference for risky/safe alternatives. Inaccurate risk/reward estimations can engender excessive risk-taking, a central trait in many psychiatric disorders. The lateral orbitofrontal cortex (lOFC) has been linked to many disorders associated with excessively risky behavior and is ideally situated to mediate risky decision-making. Here, we used single-unit electrophysiology to measure neuronal activity from lOFC of freely moving rats performing in a punishment-based risky decision-making task. Subjects chose between a small, safe reward and a large reward associated with either 0% or 50% risk of concurrent punishment. lOFC activity repeatedly encoded current risk in the environment throughout the decision-making sequence, signaling risk before, during, and after a choice. In addition, lOFC encoded reward magnitude, although this information was only evident during action selection. A Random Forest classifier successfully used neural data accurately to predict the risk of punishment in any given trial, and the ability to predict choice via lOFC activity differentiated between and risk-preferring and risk-averse rats. Finally, risk preferring subjects demonstrated reduced lOFC encoding of risk and increased encoding of reward magnitude. These findings suggest lOFC may serve as a central decision-making hub in which external, environmental information converges with internal, subjective information to guide decision-making in the face of punishment risk.