Investment Risks

Investment risks refer to the potential financial losses or volatility that may arise from an investment’s performance. These risks can stem from various factors, including market fluctuations, economic changes, industry shifts, or specific circumstances related to an individual investment. Investment risks encompass a range of uncertainties, such as market risk (the risk of price changes due to overall market factors), credit risk (the risk of a loss due to a borrower’s failure to repay their debt), liquidity risk (the risk of not being able to sell an investment quickly without a significant loss in value), and operational risk (the risk arising from failures in internal processes or systems). Understanding investment risks is crucial for investors, as it helps them to make informed decisions, assess risk tolerance, and adopt strategies to mitigate potential losses.