In investment terms, what does risk denote?

In investment terms, risk signifies the chance that an investor may lose their original investment. This concept is fundamental in finance as it quantifies the uncertainty associated with an investment's future performance. Investors are generally aware that the potential for higher returns usually comes with higher risk, but at its core, risk is about the possibility of incurring a loss. It directly relates to the likelihood of an investment failing to meet desired outcomes and can stem from various factors such as market fluctuations, economic changes, or specific issues within a company or industry. Understanding this dimension of risk helps investors make informed decisions that align with their risk tolerance and investment goals.