The investment industry uses the terms ‘risk’ and ‘volatility’ almost interchangeably, though they aren’t exactly the same thing. In this piece from Portfolio Advisor, Barings’ Daryl Lucas explains why differentiating between the two is important.
Risk is the possibility you might need your capital but cannot access it, perhaps because the capital value is impaired or it tied up in illiquid investments. Volatility is merely the standard deviation of returns. It’s a measure of the degree to which asset values move up and down.