(redirected from material risk)
Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia.


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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson


Uncertainty regarding the possibility of loss.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
[2] Material Risk Takers include heads of significant business lines such as fixed income, foreign exchange, commodities, securitization, sales areas, investment banking, commercial banking, equities, structure finance, lending, trading areas
Amended by the 2003 legislature, the statute mandates disclosure of "recognized material risks of serious complications or mortality" but does not define the word "material." This amended language replaced the earlier version's "recognized, serious, possible risks, complications and anticipated benefits," arguably lightening the doctor's duty regarding risk disclosure.
EXHIBIT 4 Isolating Which Mitigation Levers Work Best Supplier Risk Material Risk Impact Mitigation Attribute Attribute Attribute Levers 1 2 3 1 2 3 1 2 3 Level 1 X X X X Level 2 Level 3 X X X X Level 4 Level 5 X X X Level 6 Level 7 X X X Level 8 X X X Level 9 X X Level 10 X Level 11 X X Level 12 X X X
Even those jurisdictions which have adopted the material risk standard also embrace the concept that if a risk itself is not material, it need not be addressed with the patient.
In his reply dated August 2, Mr Woods said the threat of fallout across the City from the UK's withdrawal from the EU poses a "material risk to our objectives and this work is therefore a top priority".
It says that the insurance industry has provided no independent evidence of the level of fraud claims, nor has it flagged them up to shareholders as a "material risk", which it should do if they were a significant threat to business.
"We're not going to move forward with anything that has material risk," he said.
"The pervasive use of Bash and the potential for this vulnerability to be automated presents a material risk," the Federal Financial Institutions Examinations Council said.
Progress reports highlight the difference that enterprise risk management makes in your organization and should be reported in at least two ways: by material risk and by ERM program progression.
Regulators, investors, clients and other stakeholders expect risk managers to understand every material risk facing a business.
In December, Multiplex warned there was a "material risk" the stadium would not be ready, but the spokesman said the position had improved.

Full browser ?