sks to be identified include financial risks, which pertain to potential monetary losses from various systematic and unsystematic factors, and legal risks, which involve the threat of loss due to legal matters like lawsuits or compliance issues. These risks are crucial for investors in the financial market to consider alongside basic investment considerations.
When it comes to identifying categories of risks, especially in the context of projects and investments, it's crucial to understand the various aspects that might pose challenges. Among the options provided, financial risks and legal risks are two broad categories that are vital to consider.
Financial risks involve the possibility of losing money on an investment or business venture. This can be due to factors like market volatility, credit risks, liquidity risks, and interest rate risks. Investors in the financial market must analyze the risk involved in different types of financial assets to mitigate potential losses.
Legal risks pertain to the risk of loss due to lawsuits, regulatory non-compliance, or unenforceable contracts. In the financial market, legal considerations are important to investors because they can significantly affect the viability and returns of an investment.
Additionally, investors must bear in mind the four basic investment considerations which are security, profitability, liquidity, and tax considerations. Each of these can affect the overall risk profile and potential return of an investment.