Financial risk is an umbrella term for multiple types of risk associated with financing, including financial transactions that include company loans in risk of default. Risk is a term often used to imply downside risk, meaning the uncertainty of a return and the potential for financial loss.
A science has evolved around managing market and financial risk under the general title of modern portfolio theory initiated by Dr. Harry Markowitz in 1952 with his article, "Portfolio Selection". In modern portfolio theory, the variance (or standard deviation) of a portfolio is used as the definition of risk.
Read more about Financial Risk: Diversification, Hedging, Financial / Credit Risk Related Acronyms
Famous quotes containing the words financial and/or risk:
“The woman who does her job for society inside the four walls of her home must not be considered by her husband or anyone else an economic “dependent,” reaching out her hands in mendicant fashion for financial help.”
—Mary Barnett Gilson (1877–?)
“Man is so muddled, so dependent on the things immediately before his eyes, that every day even the most submissive believer can be seen to risk the torments of the afterlife for the smallest pleasure.”
—Joseph De Maistre (1753–1821)