Risk Management

The quantifiable likelihood of loss or less-than-expected returns. Examples: currency risk, inflation risk, principal risk, country risk, economic risk, mortgage risk, liquidity risk, market risk, opportunity risk, income risk, interest rate risk, prepayment risk, credit risk, unsystematic risk, call risk, business risk, counterparty risk, purchasing-power risk, event risk.
Loss A reduction in the value of an investment
Return The annual return on an investment, expressed as a percentage of the total amount invested. also called rate of return

Examples.

currency risk - the risk that a business' operations or an investment's value will be affected by changes in exchange rates.

inflation risk - The possibility that the value of assets or income will decrease as inflation shrinks the purchasing power of a currency. Inflation causes money to decrease in value at some rate, and does so whether the money is invested or not.

principal risk - The risk of losing the amount invested due to bankruptcy or default. There is always the possibility that through some set of circumstances, invested money will decrease or completely disappear. In this case, principal is lost, not just profits.

country risk - The potential volatility of foreign stocks, or the potential default of foreign government bonds, due to political and/or financial events in the given country.

economic risk - In financing a project, the risk that the project's output will not generate sufficient revenues to cover operating costs and to repay debt obligations.