Risk

Risk, in business and finance, refers to the possibility that an outcome—such as investment performance, profitability, or operational success—may differ from expectations, leading to potential loss, lower earnings, or even total failure. Risk can be caused by external factors (like market downturns, regulatory changes, or natural disasters) and internal factors (such as poor management, operational errors, or strategic missteps). Common categories include business risk (the chance a company cannot generate enough revenue to cover expenses), financial risk (the chance a company cannot meet its debt obligations), market risk, credit risk, operational risk, and reputational risk. While risk cannot be eliminated, it can be managed through various strategies, including diversification, insurance, prudent financial planning, and contingency plans.