Measurable possibility of losing or not gaining value. Risk is differentiated from uncertainty, which is not measurable. Various types of risk include actuarial risk, exchange risk, inflation risk, interest rate risk, inventory risk, liquidity risk, political risk, repayment (credit) risk, risk of principal, systemic risk, underwriting risk, and unsystemic risk.
Systemic risk, also known as market risk or systematic risk, refers to the part of a security’s risk that is common to all securities within the same general class and cannot be eliminated by diversification. The measure of systemic risk for individual stocks is the Beta Coefficient.
The term 'Too Big to Fail' (TBTF) refers to organizations, particularly financial institutions, whose failure would pose a systemic risk to the economy. This concept gained prominence during the 2008-2009 financial crisis.
