ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A financial risk is a form of risk that arises from an event and has an adverse impact on a person’s financial condition. In this life, nothing is without risk, especially when we talk about finances. There are many things that can just happen and threaten our financial stability.

Detailed explanation-2: -Based on this, financial risk can be classified into various types such as Market Risk, Credit Risk, Liquidity Risk, Operational Risk, and Legal Risk.

Detailed explanation-3: -In finance, risk refers to the degree of uncertainty and/or potential financial loss inherent in an investment decision. In general, as investment risks rise, investors seek higher returns to compensate themselves for taking such risks. Every saving and investment product has different risks and returns.

Detailed explanation-4: -Non-financial risks include: Operational risk (Op risk). In case that Op risk is considered a part of NFR (and not as equivalent), Op risk summarizes e.g. those risks which can be quantified by the use of scenario models. Examples are pandemics, floods and other weather events.