Product risk is the risk that you may not actually be able to deliver the product to market within the resources (time, money) that you have available to you. And if you do deliver the product, the risk is also in that the product may not work exactly as well as hoped or promised or envisioned. Every business has a degree of product risk, but just like financial risk, product risk can be mitigated and kept low.
For example, if you are building a very basic website like a blog, the product risk is very low. You can launch this product within a day. But if you are building a complex website that would take months of engineering time to complete, then the product risk is quite high because there are many things that can happen before the product can be launched. You may run out of money, the engineers might quit, some technical challenges may be greater than initially assumed, etc. And all that adds to the risk that the product may never be launched, or that it isn’t up to par even if it does get launched.