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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.

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exposure

(1) In finance,the amount that one may lose in an investment;the potential loss,which could be the capital invested plus any personal liability on loans in excess of the value of the property securing the loans. (2) In the market, the process of making a property known to the marketplace as available for sale or lease.(3) Physically, the direction of an improvement;for example,“The southern exposure of the house had all the best views.”