INVESTING RISKS DOCTORS SHOULD KNOW: Types & Definitions

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Financial Investing risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financial loss and uncertainty about its extent.

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BY DR. DAVID E. MARCINKO MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Understanding Financial Risk

Although broad investing risks can be quickly summarized as “the failure to achieve spending and inflation-adjusted growth goals,” individual assets may face any number of other subsidiary risks:

  • Call risk – The risk, faced by a holder of a callable bond that a bond issuer will take advantage of the callable bond feature and redeem the issue prior to maturity. This means the bondholder will receive payment on the value of the bond and, in most cases, will be reinvesting in a less favorable environment (one with a lower interest rate)
  • Capital risk – The risk an investor faces that he or she may lose all or part of the principal amount invested.
  • Commodity risk – The threat that a change in the price of a production input will adversely impact a producer who uses that input.
  • Company risk – The risk that certain factors affecting a specific company may cause its stock to change in price in a different way from stocks as a whole.
  • Concentration risk – Probability of loss arising from heavily lopsided exposure to a particular group of counterparties
  • Counterparty risk – The risk that the other party to an agreement will default.
  • Credit risk – The risk of loss of principal or loss of a financial reward stemming from a borrower’s failure to repay a loan or otherwise meet a contractual obligation.
  • Currency risk – A form of risk that arises from the change in price of one currency against another.
  • Deflation risk – A general decline in prices, often caused by a reduction in the supply of money or credit.
  • Economic risk – the likelihood that an investment will be affected by macroeconomic conditions such as government regulation, exchange rates, or political stability.
  • Hedging risk – Making an investment to reduce the risk of adverse price movements in an asset.
  • Inflation risk – The uncertainty over the future real value (after inflation) of your investment.
  • Interest rate risk – Risk to the earnings or market value of a portfolio due to uncertain future interest rates.
  • Legal risk – risk from uncertainty due to legal actions or uncertainty in the applicability or interpretation of contracts, laws or regulations.
  • Liquidity risk – The risks stemming from the lack of marketability of an investment that cannot be bought or sold quickly enough to prevent or minimize a loss.

CITE: https://www.r2library.com/Resource/Title/0826102549

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

Risk Management Textbook: https://www.routledge.com/Risk-Management-Liability-Insurance-and-Asset-Protection-Strategies-for/Marcinko-Hetico/p/book/9781498725989

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2 Responses

  1. Sebastian,
    Many thanks for the “like.”
    ME-P

    Like

  2. What if you bought 100 shares of these companies at the start?
    https://www.msn.com/en-us/money/companies/what-if-you-bought-100-shares-of-these-companies-at-the-start/ss-AAOXs2k?li=BBnb7Kz#image=2
    Dr. David E. Marcinko MBA

    Like

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