Risk

Definition

Risk in the context of finance and the financial manager involves the potential for loss or the chance that an investment's actual return will differ from the expected return. It is inherent in all financial decisions and investment activities.

Related terms

Return: The gain or loss on an investment over a specified period, representing success or failure in navigation through risks.

Investment: The allocation of resources, typically money, with the expectation of generating an income or profit, inherently tied to varying degrees of risk.

Portfolio Diversification: A risk management strategy involving investing in a variety of assets to reduce exposure to any single asset or risk