Risk

Meaning :

Risk is the possibility that financial outcomes may differ from what you expect, often meaning there is a chance of loss or uncertainty. Risk exists in all investments,

loans, and business activities because of changing markets, prices, interest rates, and  economic conditions.

Example : 

For instance, if you invest in the stock market and the share prices fall  unexpectedly, you may face losses, which is an example of risk.

How to Understand : 

Risk means uncertainty; things may not go as planned.

An investment might not give the expected returns, a borrower might not pay back a loan, or an asset might not sell easily.

Understanding risk helps you prepare and choose safer options.

Importance :

It helps investors decide how much they can safely invest without losing money.

Risk awareness supports businesses in avoiding operational and financial losses.

Banks assess risk before giving loans to ensure they will be paid back.

All financial planning relies on knowing the levels of risk involved.