downside risk
Possible negative outcome
Downside risk is the potential for loss or negative outcome in an investment or decision—specifically, how much you stand to lose if things go badly.
Financial analysts distinguish downside risk from overall volatility because investors care more about losses than equivalent gains: The fund's low downside risk appealed to conservative investors.
The term appears in business contexts beyond finance: We need to assess the downside risk before launching.
- exposureState of being unprotected
- vulnerabilityOpenness to harm
- lossBeing without something
- stop lossPreset sale trigger
- hedgeBoundary of planted shrubs
protection · tail · black swan · drawdown · volatility · market correction · crash · plunge · worst case scenario · insurance · safety net · cushion · floor · capital preservation · safety · threshold · collapse · decline
- investment metricsalpha, beta, return, yield, volatility
- Risk Metricsbacktesting, stress testing