What is an example of fundamental risk?

Fundamental risk refers to risks that affect a large number of people or an entire economy, typically arising from factors that are outside an individual's control. These risks can have widespread consequences and are often systemic in nature.

In this case, an economic recession serves as a prime example of fundamental risk. Economic recessions can lead to widespread unemployment, reduced consumer spending, and a downturn in business activity, affecting not just one individual or entity but a broad segment of the population. The ripple effects of a recession can impact various sectors, resulting in significant financial distress for many people and businesses alike.

On the other hand, risks like a house fire, car theft, and bank robbery are classified as particular or personal risks. These are specific to an individual or a limited group and do not carry the systemic impact or widespread occurrence characteristic of fundamental risks. Individual events, such as theft or property damage, might affect only a few people directly, rather than impacting a significant portion of society or the economy as a whole.