What is Risk and Types of Risk.

Risk and Types of Risk.

Risk mean to a threat to lose or expose to some thing. A situation where a possibility to lose your investment. Any other situation which is harmful or negative to your business like damage, liability, or loss to your organization.

The basic types of risk.

• Systematic Risk. Systematic risk is such type of risk which is unavoidable and have an influence over the large amount of assets of an organization. This risk have huge impact on your assets in portfolio. It is very difficult to protect yourself from this type of risk.

•  Unsystematic Risk. Unsystematic risk is the assets specific risk. This risk effect the very small amount of assets in your portfolio. The daily changes in the prices of stock market will effect the asset value. The diversification is the only way to avoid this type of risk or minimize the risk.

•  Market Risk. Market risk is such risk which is known to every one the daily changes and fluctuation in the prices of the stock. The volatility makes the investor to make the profit from the stock. This risk is mainly applies in options and stocks.