In the world of finance, risk is the chance that the actual return on an investment will be different from what you expected. This includes the possibility of losing some or all of your original investment. However, risk isn’t just a potential for loss; it can also represent an opportunity for gain. This dual nature means:

• Positive Risk (Opportunity): When you take on investment risks, you have the chance for returns higher than the expected rate. For example, investing in a startup company might be risky, but if the company succeeds, the returns can be substantial.
• Negative Risk (Threat): On the flip side, there’s the potential for loss or underperformance. This could mean losing part or all of your investment if, for instance, the startup fails.
  
  

Understanding risk is, therefore, crucial for making smart investment decisions.