For example, if a country's government changes the rules of commerce or experiences political unrest, the companies in that country may pass on the negative impact of such changes to their investors. Currency risk is more prevalent. The actual value of a foreign investment depends on how its currency relates to the US dollar. When the dollar is strong, foreign investments tend to return less in dollars. Market risk is the likelihood a broad market, such as the bond or stock market, will decline in value.
Volatility risk is the up and down movement of the value of any investment.
Some investments are more volatile than others. In short, a highly volatile investment has greater risk that its value may go down significantly in the short-term. An investment with low volatility has less risk that its value may drop significantly. Annuity Board funds help temper risk through diversification Diversification is your first line of defense against risk. If all your money is tied up in one kind of investment, you're putting everything on the line if that investment falters.