Downside Risk

An estimation of a security's potential to suffer a decline in price if the market conditions turn bad.

Investopedia Says:
You can think of this as an estimate of the amount that you could lose on a stock or other investment.

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1. An investment risk evaluation derived by estimating the total loss that could occur in a worst-case scenario. A variety of factors enter into such an evaluation including book value and net earnings as well as general market conditions.

2. A company's risk of loss in a downturn in business activity. For example, an auto manufacturer has downside risk in an economic downturn because it cannot slash its fixed costs, which results from the capital-intensive nature of the industry.