Investment Risk

Investment Risk

See Also:
Hedging Risk
Risk Premium
Business Risk
Interest Rate Risk
Commercial Risk

Investment Risk Definition

The investment risk definition is the risk of a particular investment. Furthermore, an investment risk assessment usually contains several different forms ranging from interest rate risks to currency risks.

Investment Risk Meaning

Investment risk contains several different measures, including the following:

Market Risk

This is the risk associated within a market or index like the S&P 500 or the Dow Jones. There are currently two types of market risk. The first is the unsystematic risk. It can be diversified away in a well-managed portfolio. Then the other is systematic risk. Use it to describe factors that deal with the entire economy or an index which are simply inherent when investing.

Interest Rate Risk

This is the risk associated with bond and debt markets. Specifically the ways in which the interest rates change in the market or what is better known as the yield to maturity.

Currency Risk

Currency is the risk associated with an investment if it is denominated in another currency. The risk here is that the exchange rates change. In some cases it may benefit the investor, but in others, it can really hurt.

Liquidity Risk

This is the risk associated with the ease an investor can convert that particular investment into cash. For example, land is a lot harder to turn into cash over a very liquid asset, such as commercial paper. This is not normally a problem unless an investor needs to meet short term obligations.

Financial Risk

This is the risk that there is something fundamentally wrong in the financials of a company. The investor may not see that risk. Furthermore, this type of risk is normally associated with scandals such as Enron or Worldcom.
If you want to overcome obstacles and prepare how your company is going to react to external factors, then download your free External Analysis whitepaper
Investment risk
[box]Strategic CFO Lab Member Extra
Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.
Click here to access your Execution Plan. Not a Lab Member?
Click here to learn more about SCFO Labs[/box]
Investment risk


The Struggles of Private Company Accounting

Hiring the right accountant  When I meet a business owner operating at a successful $10 million in revenue, they often mention, “My CPA”… I immediately know that CEO/Entrepreneur is referring to their Tax CPA.  That is because one thing that all Entrepreneurs have in common is that they must file a tax return.  So, from

Read More »


Friend of the firm, Birgit Kamps, recently had Strategic CFO President, Dan Corredor, as a guest on her podcast, CEO Blindspots. CEO BLINDSPOTS HOST: Birgit Kamps. She was speaking five languages by the age of 10, and lived in five countries with her Dutch parents prior to becoming an American citizen. Birgit’s professional experience includes starting

Read More »

SHRM calls ICHRA the 401K for Group Health Benefits

Fed-up with group health insurance? ICHRA is the new way to offer great health benefits and avoid ACA penalties, SHRM calls it the 401K for group health benefits.  In 2020 the Department of Labor, HHS and IRS changed the rules for employer health benefits. They changed the Affordable Care Act mandates and penalties for every

Read More »


Financial Leadership Workshop

MARCH 28TH-31ST 2022



Strategic CFO™ Financial Leadership Workshop
The Art of the CFO®


September 12-15th 2022