The expression double-edged sword implies that an action or decision that appears to help can also harm the sword holder. Metaphorically speaking, a sword with two edges would solve one problem, but could potentially cause even more problems on the back swing. Some sources also suggest the expression cuts both ways also covers the same territory, meaning favorable consequences on one side can lead to unfavorable consequences when the sword swings back.
A single-edged sword is used for slashing and cutting from a mounted or superior position. A samurai sword or katana is one example of such a sword. A double-edged sword, like a rapier, would be used in battle to engage enemies approaching from both sides of the fighter. It could be equally as deadly swung to the left or right, and could possibly injure the swordsman himself, if not handled properly.
In a business setting, an employer might describe a pay raise as a double-edged sword. While an employee may benefit from the increased pay, the money needed to finance the raise may have to come from another department's budget. Others may see a government military operation in a similar way, since the effect of a quick victory may be the destabilization of the entire region. A number of situations in which the same action that heals can also harm could be described with this term.
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There are some etymologists who question the accuracy and appropriateness of term in the metaphorical sense. In real life, a sword with two edges does twice as much damage, with only a minimal risk to the wielder. There is no tangible harm/heal relationship, but the expression suggests one. The concept of an action or decision cutting both ways does seem plausible, but the swordsman is generally protected from the blade. Critics suggest a different weapon, such as a double-tipped spear, implies more of a mutual threat.
Regardless of its historical or military accuracy, the expression does succeed in describing a potentially dangerous situation with unforeseen ramifications. Whenever such a situation arises, it pays to examine both sides of the issue to make sure the sword's return stroke does not make matters worse.