Investment risk is an unavoidable aspect of investing. It refers to the probability of losing money or not achieving the expected return on investment. It is important for investors to understand and carefully evaluate the risks associated with different investment opportunities.

One common risk that investors face is market risk. This type of risk arises from fluctuations in the overall market conditions, such as changes in interest rates, economic indicators, and geopolitical events. Market risk affects all types of investments and cannot be completely eliminated. However, by diversifying the investment portfolio across different asset classes and geographical regions, investors can minimize the impact of market risk.

Another significant risk is company-specific risk. This risk relates to the financial health and performance of individual companies in which an investor has invested. Factors such as management decisions, competition, and industry trends can have a direct impact on the financial performance of a company. To mitigate company-specific risk, investors should conduct thorough research and analysis before investing in individual stocks or bonds.