What is Risk?

In traditional finance we define “risk” as being a measure of the variance on the returns of an asset. 

Summary: What is risk?

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In traditional finance we define “risk” as being a measure of the variance on the returns of an asset. More often than not, companies are exposed to various types of risk. These can be business risk, solvency risk, FX risk and market risk. The risks that companies are exposed to are broadly divided into two main categories, namely, systematic and unsystematic risk.