No investment is risk-free, and that applies to money market mutual funds as well. Despite money market funds being less volatile than many other investments, changes in interest rates can cause fluctuations in the fund's value and your principal.
Money market funds also face credit risk, which is the likelihood of an investment issuer defaulting or failing to repay on securities. Although the risk is usually minimal, it can force fund managers to sell at a loss, affecting the pricing of securities and the fund's value.