Unlimited Risk

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Unlimited Risk

The risk that one's loss on an investment will be larger than the amount one originally invested. For example, in short selling one will lose money if the short sold security rises in price. Because the potential rise in price is theoretically infinite, one may lose much more than one invests. Likewise, a general partner of a company has unlimited liability, meaning that in the event of bankruptcy he/she must pay all debts the company incurs regardless of how much he/she invested in it. See also: Limited liability.
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By committing Europe's biggest economy - and already its effective paymaster - to the ESM, parliament was essentially exposing Germany's public finances to unlimited risks should one eurozone country after another topple under the debt crisis, they argued.
Writing uncovered put and call options involves potentially unlimited risks.
Short selling is an advanced trading strategy involving potentially unlimited risks, and must be done in a margin account.