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Risk

Often defined as the standard deviation of the return on total investment. Degree of uncertainty of return on an asset. In context of asset pricing theory. See: Systematic risk.

Risk

The uncertainty associated with any investment. That is, risk is the possibility that the actual return on an investment will be different from its expected return. A vitally important concept in finance is the idea that an investment that carries a higher risk has the potential of a higher return. For example, a zero-risk investment, such as a U.S. Treasury security, has a low rate of return, while a stock in a start-up has the potential to make an investor very wealthy, but also the potential to lose one's entire investment. Certain types of risk are easier to quantify than others. To the extent that risk is quantifiable, it is generally calculated as the standard deviation on an investment's average return.

risk

The variability of returns from an investment. The greater the variability (in dividend fluctuation or security price, for example), the greater the risk. Because investors are generally averse to risk, investments with greater inherent risk must promise higher expected yields.

Risk.

Risk is the possibility you'll lose money if an investment you make provides a disappointing return. All investments carry a certain level of risk, since investment return is not guaranteed.

According to modern investment theory, the greater the risk you take in making an investment, the greater your return has the potential to be if the investment succeeds.

For example, investing in a startup company carries substantial risk, since there is no guarantee that it will be profitable. But if it is, you're in a position to realize a greater gain than if you had invested a similar amount in an already established company.

As a rule of thumb, if you are unwilling to take at least some investment risk, you are likely to limit your investment return.

risk

see UNCERTAINTY AND RISK.

risk

Uncertainty regarding the possibility of loss.

References in periodicals archive ?
It will host 15,000 senior security, safety and risk prevention professionals from across the Middle East.
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The European operations centre in Dundalk, Co Louth, will provide customer support, risk prevention, merchant services and sales for the web retailer and its subsidiary PayPal.
PICC (Group)'s chairman and president Yan Wu had said in January the insurer is seeking investment synergy by further enhancing the use of capital while intensifying its compliance and risk prevention in 2012.
There were no initial reports of damages or deaths in the earthquake zone near the Pacific coast or in the capital of San Jose; however, Douglas Salgado, a geographer with Costa Rica's National Commission of Risk Prevention and Emergency Attention, told the Associated Press that officials were having problems accessing the area.
Safeguarding Children At Risk Prevention and Action project manager Richard Haigh said children who go missing are at risk of sexual exploitation by adults waiting to take advantage of them.
The results of this study underscore the need to consider dietary sources of MeHg in risk assessment and in developing approaches for risk prevention and mitigation.
College-level audiences receive details on identifying, limiting and managing conflicts of interest through short-term actions and long-term programs by institutions and individuals alike, and makes recommendations on risk prevention and structure which are key to any college-level collection strong in medical ethics debates.
MUSCAT | A delegation led by Sayyid Saud bin Ibrahim bin Saud Al Busaidi, minister of interior, yesterday returned home after a visit to the United Arab Emirates (UAE) after attending the opening ceremony of the International Security and Risk Prevention Exhibition which opened in Abu Dhabi yesterday.
Topics include air pollution; water and soil quality issues; risk prevention and monitoring; ecology and health; food safety; toxicology analysis; and occupational health.
Document SOS, employing 20 and successfully trading for over 20 years, was presented with the Strategic Risk magazine award for their exceptional services in Risk Prevention and Disaster Restoration of legal, financial and business critical information stored on paper.
EUROPEAN Union (EU) ministers are considering formal proposals for disaster risk prevention measures to be a priority of EU regional aid spending from 2007-13.