Investment activity

Inflationary risk is a risk that at a high inflation income received by investors from investments lose their value faster than they grow and in this case an investor can have losses. As the world experience shows the high level of inflation destroys market though there have been elaborated many ways of inflationary risk decreasing.

Liquidity risk is a risk connected with the opportunity of losses at realization of assets due to changes of the quality assessment.

Political risk is a risk connected with the changes of the policy of the government, military actions, nationalization, etc. In order to control political risks banks establish restrictions of lending.

Financial risk is a risk of reduction of profitability, direct financial losses connected with the operations at the financial market.

Credit risk is a risk of non-repayment or incomplete repayment of the principal debt or interest on it by the borrower in due time. It is the main risk of the bank participating in project lending under condi­tions of the project finance. Increased credit risk is one of the main features of the project finance.

Interest risk is a risk of losses which may have investors due to changes of the interest rates in the market. It usually occurs when credit resources with a floating rate are used.

Country risk is considered to be an external project risk. Country risk means that political and social processes inside the country where the project is performed can create serious obstacles for the project

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activity and even make it impossible. Factors of the country risks -actions of the central government and local authorities, wars, strikes, etc. are beyond the influence of the project participants. Country risks can be divided into two big groups: political country risks and eco­nomic country risks.