Risk glossary

 

Endogenous risk

Endogenous risk is the risk generated and reinforced within the financial markets by the interaction of market participants, as opposed to exogenous risk which refers to shocks that come from outside the financial system. Market participants reacting to exogenous shocks such as news events can exacerbate the effect of those shocks by how they behave: for example, selling causes prices to fall, triggering further selling.

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