Risk

From WilmottWiki

Risk is in financial terms the possibility of making a loss. In classical quantitative finance risk is seen as something to be avoided or eliminated wherever possible. If risk cannot be eliminated then an investor ought to be compensated for taking it. If risk is measured by the standard deviation of returns then such compensation is via a positive expected profit.

The ratio of expected return in excess of the risk-free rate of return to standard deviation is the Sharpe ratio of an investment or the market price of risk.

Portfolios of investments often have their risk quantified by Value at Risk.