Equity risk refers to the potential for financial loss due to fluctuations in the market value of stocks or equity investments. This risk arises from changes in factors such as company performance, economic conditions, market sentiment, and broader economic trends. Investors in equities face the possibility that stock prices may decline, impacting their overall portfolio value. Effective management of equity risk involves diversification across different sectors and asset classes, employing risk management strategies like options or futures, and conducting thorough research and analysis to make informed investment decisions.

Basel scope:

• Pillar 1
• Pillar 2

Capital requirements:

Mitigated by Capital

Related Links:

•       BCBS 158 - Revisions to the Basel II market risk framework
•                 Basel Framework
•       Fed / OCC / FDIC: Equity Risk