As investors, our job is to formulate a robust investment thesis to justify our investments in great businesses. And that includes potential risks.
A well-rounded thesis should include the company’s competitive strengths as well as catalysts for long-term business growth.
However, no investment thesis is complete without looking at risk.
Risks are present in every investment we make and have the potential to scuttle the investment thesis if they are serious enough.
The problem is that some investors may miss out on risks as they chase higher returns.
That could expose them to more risks than they are willing to accept.
Remember that risks are specific to a company or industry and there is no “one-size-fits-all” formula for assessing them.
Here are five types of risks that investors should consider for their investments.
