What is the term used to describe the risk of losing investment capital?

Investment risk refers to the potential for losing some or all of the initial capital invested in a financial asset or portfolio. This concept encompasses various types of risks associated with investing, including market fluctuations, economic changes, and changes in interest rates. When investors allocate their funds, they face uncertainty regarding the future performance of their investments, which can lead to capital loss.

This term also implies a broader understanding that investment risk can involve different forms, such as market risk (the risk of losses due to market movements) and others specific to particular asset classes. In essence, investment risk is the umbrella term that captures the overall likelihood of encountering losses in the investment process, making it central to financial planning and decision-making for investors.