The risk of an investment proposal is defined as a variability of profit possibilities. Decision situations on investment can be divided into three groups, namely the situation of certainty, risk, and uncertainty. The difference lies in the unknown is whether the probability of occurrence of an event.
In risk situations the probability is known, whereas in situations of uncertainty probabilities are unknown. Issues to be discussed here is a situation of risk, although the terms risk and uncertainty are often used in the same sense.
Almost all investments contain elements of risk, because all investors can do is to estimate some of the benefits expected from the investment, and how far the possibility of actual future results may deviate from expected results.
Investment risk implies that the return will come at a time when that can not be known but can only be expected / estimated.
There are several sources of risks that could affect the magnitude of the risk of an investment include:
1. Interest rate risk
2. Market risk
3. Inflation risk
4. Business risk
5. Financial risks
6. Liquidity risk
7. Currency exchange rate risk
8. Country risk
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