Financial risk

Financial risk refers to the possibility of losing money or facing negative financial consequences. It can stem from various sources, such as investments that may not perform as expected, fluctuations in market prices, changes in interest rates, or economic downturns. Essentially, it reflects the uncertainty about future returns on investments or the stability of financial assets. Companies and individuals assess financial risk to make informed decisions, aiming to balance potential rewards with the likelihood of losses, ultimately safeguarding their financial well-being. Understanding financial risk is crucial for effective financial planning and investment strategies.