Volatility risk is the risk of a change of price of a portfolio as a result of changes in the volatility of a risk factor. It usually applies to portfolios of derivatives instruments, where the volatility of its underlyings is a major influencer of prices.
Read more about Volatility Risk: Sensitivity To Volatility, Risk Management
Famous quotes containing the word risk:
“The Englishmans strong point is his vigorous insularity; that of the American his power of adaptation. Each of these attitudes has its perils. The Englishman stands firmly on his feet, but he who merely does this never advances. The Americans disposition is to step forward even at the risk of a fall.”
—Thomas Wentworth Higginson (18231911)