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:
“In full view of his television audience, he preached a new religion—or a new form of Christianity—based on faith in financial miracles and in a Heaven here on earth with a water slide and luxury hotels. It was a religion of celebrity and showmanship and fun, which made a mockery of all puritanical standards and all canons of good taste. Its standard was excess, and its doctrines were tolerance and freedom from accountability.”
—New Yorker (April 23, 1990)
“Every day, in this mostly male world, you have to figure out, “Do I get this by charming somebody? By being strong? Or by totally allowing my aggression out?” You’ve got to risk failure. The minute you want to keep power—you’ve become subservient, somebody who does work you don’t believe in.”
—Paula Weinstein (b. 1945)