While financial markets offer numerous benefits, they also come with inherent risks:
Market Risk: The risk of losses due to changes in the market prices of assets. Credit Risk: The risk that a borrower will default on their financial obligations. Liquidity Risk: The risk that an entity may not be able to meet its short-term financial obligations due to the inability to convert assets to cash. Operational Risk: The risk of loss due to failed internal processes, systems, or external events. Systemic Risk: The risk of collapse of an entire financial system or market, leading to a significant economic downturn.