There are multiple types of risk that can affect an investment and must be taken into account to determine its sensitivity.

The following are the most frequent risks when considering the sensitivity of the investment:

Systemic risk or market risk

This is the alteration of the general market conditions of a country or the international market. Among the systemic risks we can highlight:

Country risk score: This means the image that the country of origin has with respect to the world. This score is particularly important in the case of very large investments or investments that depend on foreign capital. Changes in the level of country risk are reflected in the profitability of the investment.

Declines in sectoral Gross Domestic Product (GDP) or declines in the prices of export products: This means that, at the international level, there is less demand for certain national products, which may affect all those investments that depend on a non-local market.

Operating risks

Falling prices in the future: This risk refers to the possibility that the product or service in which we are going to invest may have a significant depreciation in the future.

Rising cost of materials or inputs: This risk is almost inevitable. As we know, in general, materials and inputs tend to increase in cost. This risk must be taken into account especially if we are thinking of investing in a business.

A market with a lower than expected growth: This risk has to do with the fact that our investment does not yield the profits we originally projected. It may happen that a group of stocks that was trending upward may stagnate or unexpectedly fall back.

External factors: This category may include natural disasters such as earthquakes and floods, social problems (strikes, insecurity) or even public health problems. These problems are not easily predictable, but should be taken into account when thinking about investing in anything.

Financial risks

Rises in the interest rate of a variable rate debt: If you have a loan for investment, you must take into account the possibility that interest rates may increase over time, if it is a variable rate.

Rises or falls in the exchange rate: This risk is very important when investing in instruments related to the international market, if you start a business that has to do with suppliers or buyers abroad. In some cases, drops in the exchange rate can be detrimental to the investment, and in other scenarios, they can be beneficial.