What is Macro risk?
Macro risk refers to a type of financial risk associated with political or macroeconomic factors. Some of the macroeconomic variables generating macro risk include interest rates, exchange rates, unemployment rates, price indexes, housing starts and agricultural exports.
Where have you heard about Macro risk?
You may have heard the term Macro risk mentioned in relation to Brexit. Some reports stated that a macro risk for the UK as a result of leaving the European Union would be manufacturing companies deciding to move offshore.
What you need to know about Macro risk.
Macro risk can be applied in three different ways, referring to either the economic or financial risk found in stocks and funds; the impact of financial or economic variables on political risk and the political risk found in different countries. Financial planners deem macro risk associated with funds, stocks and portfolios a major concern. In a bid to seek protection, many organisations provide reports and information on a country's political risk with companies having the option to purchase political risk insurance in attempt to mitigate potential losses.