Börsenlexikon: Risk

The chance that the actual return on an investment will be different than expected. This includes the possibility of losing some or all of the original investment. Risk is usually measured by calculating the standard deviation of the historical profits or average profits of a specific investment. A fundamental idea in finance is the relationship between risk and reward. The greater the risk an investor is willing to take, the greater the potential gain. The reason for this is that investors need to be compensated for taking on additional risk.