Ch 20: Types of Financial Risk

About This Chapter

This handy chapter outlines different types of financial risk for your review on any smartphone, tablet or computer 24/7. When you access this resource, you'll find lessons and quizzes you can use any time you'd like to prepare for a test or catch up after missing class.

Types of Financial Risk - Chapter Summary

In this chapter, we've provided short, engaging lessons on the types of financial risk. Our helpful videos are generally less than ten minutes in length and cover the different types of financial risk, portfolio risk management, investment risks and how to reduce them. Take your time as you complete this chapter, and feel free to go back as many times as needed to ensure your complete understanding. Our experts would be happy to answer any questions you submit through the Dashboard. Once you've finished this chapter, you should be able to:

  • Define bond risk and its different types
  • Outline the formula and models for interest rate risk
  • Discuss exchange rate risk and forms of exposure
  • Provide the definition and examples of speculative risk
  • Identify the different types of enterprise risk
  • Give a definition of operational risks and liquidity risks
  • Differentiate between systematic and unsystematic risk

10 Lessons in Chapter 20: Types of Financial Risk
Test your knowledge with a 30-question chapter practice test
Financial Risk: Types, Examples & Management Methods

1. Financial Risk: Types, Examples & Management Methods

In this lesson, you will explore the various types of risks faced by a business and understand how financial risk is different from other types of risks. Then, you will learn about the different types of financial risks and methods to manage them.

Investment Risks: Definition & Types

2. Investment Risks: Definition & Types

This lesson highlights the definition of investment risk and the differences between the various types of investment risks investors face in the marketplace.

How to Reduce Investment Risks

3. How to Reduce Investment Risks

Stock market investments come with both the hope of profitable returns and the risk of significant losses. In this lesson, we'll discuss how you can manage your risk and optimize your exposure to stock market volatility.

Interest Rate Risk: Definition, Formula & Models

4. Interest Rate Risk: Definition, Formula & Models

Interest rate risk is really the risk of two different events (price reduction and reinvestment rate reduction) caused by a change in interest rates. Interest rate risk affects bond investments, but the good news for bond investors is that it can be mitigated or eliminated.

Exchange Rate Risk & Forms of Exposure

5. Exchange Rate Risk & Forms of Exposure

International businesses face certain risks, including the risk of exchange rates being unfavorable. In this lesson, we'll explore forms of exchange rate exposure, including short-run, long-run, and translation exposure.

Speculative Risk: Definition & Examples

6. Speculative Risk: Definition & Examples

This lesson will provide an overview of speculative risk. This overview will provide the definition and several examples of speculative risk from an investor's point of view.

Enterprise Risk: Types & Strategies

7. Enterprise Risk: Types & Strategies

What kind of risk exposure does a business enterprise have, and what can they do to mitigate risk? In this lesson, we'll discuss types of enterprise risks, how they're measured, and what businesses can do to minimize potential harm.

Operational Risks: Definition & Examples

8. Operational Risks: Definition & Examples

In this lesson, we'll define operational risk in more than one way. Then, we'll go over the subcategories of operational risks and provide numerous examples of each.

Liquidity Risks: Definition & Examples

9. Liquidity Risks: Definition & Examples

This lesson defines the two main types of liquidity risk: 1) trading liquidity risk and 2) funding liquidity risk. You'll learn to identify conditions that may lead a person or bank being unable to meet its short-term financial obligations.

Systematic & Unsystematic Risk: Definition & Examples

10. Systematic & Unsystematic Risk: Definition & Examples

In financial markets, risk is an important concept to understand. If you hope to make money, you must risk money. In this lesson, we'll learn the difference between systematic and unsystematic risk, which will help you develop your investing strategy.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
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Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
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