Investment risk refers to the possibility of losing some or all of the original investment. It arises from various factors, including market fluctuations, economic changes, and company performance. Different types of investments, such as stocks, bonds, and real estate, carry varying levels of risk, with stocks generally being more volatile than bonds. Investors assess risk to make informed decisions about where to allocate their money. Tools like diversification and asset allocation can help manage risk by spreading investments across different assets. Understanding investment risk is crucial for achieving financial goals while minimizing potential losses.