RISK

in economics and finance, an allowance for the hazard (risk) or lack of risk in an investment or loan. Default risk refers to the chance of a borrower's not repaying a loan. If a banker believes that there is a small chance that a borrower will not repay a loan, the banker will charge the true interest plus a premium for the default risk, the premium depending on the degrees of presumed risk. All stock investment carries an implicit risk, as there is no guarantee of return on investment. Thus, trading or variability risk is the amount that the return may vary, up or down, from the expected return from investments.