Concentration risk

A type of investment risk that occurs when investments are concentrated in one industry or market. When this is the case, a single event can hurt the entire portfolio. Risk concentrations in financial conglomerates can come in seven categories of exposures, to: individual counterparties, groups of individual counterparties, counterparties in specified geographical locations, counterparties in industries, counterparties in products, key business services (such as back-office services), and natural disasters.