risk

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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 ?
The Biostation's Risk Prevention Initiative -- presently in the process of being funded -- is designed to provide this information in an easily understandable format.
In addition to drawing up a formal action plan, the Council agreed there was a need to improve co-operation between Member States, third countries where non-members are concerned and the European Commission on risk prevention and limitation.
Classification thus reveals to watershed managers increased opportunities for risk prevention and locally appropriate goals and methods for watershed restoration.
Contract notice: health training and occupational risk prevention services for the city of meyzieu
Come Sunday, July 18, the Ministers will hold a debate on the European Commission's new Communication proposing a concerted flood risk prevention and management initiative.
Contract notice: maintenance of automatic doors, gates and barriers, semi-automatic and adjustable sun breezes flanders buildings, argon (school of social service - building c) and antenna of occupational risk prevention of seine and marne
Prior information notice without call for competition: Contracting the occupational risk prevention service through the Gipuzkoa Foral Recruitment Center