5 Types of Concentration Risk
John Spacey, August 25, 2015 updated on March 21, 2021
Concentration risk is the potential for a particular investment or class of investments to threaten the health of a financial institution or investment portfolio. The following are a few types of concentration risk.
1. Credit RiskConcentration risk was originally a term that banks used to describe credit risk in the form of lending too much to one particular customer or type of customer such as companies in a particular industry. In recent years, the term is also used to describe broader portfolio diversification risks.
2. Country RiskConcentration of a portfolio on investments in a particular country.
3. Investment RiskExposure to price fluctuations in a particular investment such as a stock or a basket of stocks in the same industry.
4. Commodity RiskOver-investment in assets that are tied in some way to the price of a commodity. For example, the price of airline stocks may be influenced by the cost of oil.
5. Political RiskInvestments that are exposed to risk from a particular political event such as an election.
RiskThis is the complete list of articles we have written about risk.
If you enjoyed this page, please consider bookmarking Simplicable.
Business RisksA list of common business risks.
Risk TreatmentThe four things that can be done about risk.
Risk Management Effectiveness
A metric for measuring risk management.
Positive RiskThe potential that you'll achieve too much of a good thing.
Any risk that people have a strong aversion too.
Risk TakingThe definition of risk taking with examples.
Risk ExamplesA list of risk examples by type.
Risk Probability vs Risk ImpactThe two main factors in modeling a risk.
Calculated RiskA definition of calculated risk with an example.
How to calculate relative risk with examples.
Economic TheoriesA list of economic theories that are particularly useful for business.
The tendency for people at high risk to buy insurance.
A list of economic positions or capabilities that allow you to outperform in a particular industry.
Knowledge WorkA definition of knowledge work with examples.
ProductionA definition of production with examples.
An overview of post-scarcity.
Economic InfrastructureThe common types of economic infrastructure.
The common types of business competition.
InefficiencyThe common types of inefficiency.
An overview of supply with common examples.
TrendingThe most popular articles on Simplicable in the past day.
New ArticlesRecent posts or updates on Simplicable. Site Map
© 2010-2023 Simplicable. All Rights Reserved. Reproduction of materials found on this site, in any form, without explicit permission is prohibited.
View credits & copyrights or citation information for this page.