This is the possibility that an investment (e.g., a stock) will decline in value. As a result, if you sold the investment, you would receive less than what you initially paid for it.
Credit Risk
This is the possibility that the issuer of an investment (e.g., a corporate bond) may not live up to its financial obligations. A default by the issuer could mean that you lose your invested capital and the expected interest payments.
Inflation Risk
This is the possibility that the value of a long-term asset (e.g., a government bond) may not grow enough to keep up with inflation, reducing your purchasing power as a result.
Reinvestment Risk
This is the possibility that interest rates will fall as an investment (e.g., a bond) matures. If this occurs, you may be unable to reinvest matured assets at the rate of return you were accustomed to receiving. This type of risk also applies to reinvesting the coupon payments received from bonds and other fixed-income payments.
Liquidity Risk
This is the possibility that you will be unable to liquidate an asset (e.g., real estate) when you want and at the price you want. As a result, you may be forced to retain the asset or accept less than you wanted for the sake of liquidity.
National, International, and Political Risk
The possibility that a country's government will suddenly change its policies. Events such as wars, embargos, coups, and the appointments of individuals with unfavorable economic policies can impact the financial markets, especially concerning investments related to that country. Possible results include changes in tax structures and changes in bond or stock ratings.
Economic Risk
The risk that the economy will suffer a downturn as a whole. Such an event generally affects all the financial markets across the board, from product prices to the job market.
Industry Risk
The risk that a specific industry will suffer a downturn. Often, industries related to the one that experiences problems will suffer as well.
Tax Risk
The risk that high taxes will make investments less profitable for both businesses and investors. Businesses that have to pay higher tax rates often have less capital to go around and, as such, cannot expand or improve. Investments that carry heavy tax baggage generally lead to lower dividends for an investor.