Risk refers to the uncertainty or potential for loss in an investment, where the return may be lower than expected or even result in a loss.
It stems from various factors, such as market volatility, economic conditions, company performance, and unforeseen events. Investors face different types of risks, including financial, operational, and market risks, which can affect the performance of their investments.
The greater the risk, the higher the potential for both gain and loss. Investors assess risk through various tools and strategies, including diversification, risk tolerance levels, and careful market analysis, to manage and mitigate potential losses.