Financial Risk Assessment

Financial risk is the possibility of losing money due to the occurrence of some foreseeable or unforeseen circumstances.
There are several main methods for assessing financial risk:
Statistical risk assessment is a method of risk assessment based on a large amount of information about changes in the prices of investment objects (securities, currency, precious metals, etc.). The disadvantage of the method is the lack of sufficient information for evaluation.
Expert – selection of professional assessments of the state of the market and forecasts of changes in prices for investment objects (securities, currency, precious metals, etc.). The disadvantage of the method is the subjectivity of expert assessments.
The analogue method is a comparison of price changes for similar investment objects (securities, currency, precious metals, etc.). The disadvantage of the method is that there is often no absolute analogy.
Calculation of the investment risk ratio is a quantitative assessment of risk as the ratio of the amount of possible loss to the expected income.
 
If the investment risk ratio is less than

5%, then the risk is considered acceptable, if the investment risk ratio is 5-10%, then the risk is considered medium, if the investment risk ratio is 10–20%, then the risk is considered high if the investment risk ratio is higher than 20 %, the risk is considered to be very high.