Risk Terms
Concentration Risk
Definition
What is Concentration Risk?
The risk of excessive exposure to one asset, issuer, sector, country, or factor.
Example in practice
How This Looks in Practice
Holding 60% of a portfolioThe complete collection of investments owned by an investor or managed under one mandate. in one bank creates concentrationThe degree to which a portfolio depends on a small number of holdings, sectors, or issuers. risk.
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Related Terms
Risk Terms
Market Risk
The possibility of loss because broad market prices or rates move against an investment.
Risk TermsCredit Risk
The possibility that a borrower or issuer will fail to make promised payments or suffer a downgrade.
Risk TermsInterest-Rate Risk
The possibility that changing market interest rates will reduce an investment's value or income appeal.
MiscellaneousBusiness Day
A day on which relevant financial institutions and markets are open for normal processing.