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These risks are characterized as general because they are inherent to the operation of the capital market and, in general, the financial system, arising under circumstances that cannot be predicted or excluded. They are associated with the functioning of the financial system in general, credit institutions, investment firms, and issuers issuing financial instruments, which are the subject of investment, and constitute parameters that affect one or more of these quantities, the change of which affects the value of an investment. International organizations, central banks, and many other entities make significant and systematic efforts to shield the financial system and markets and protect them from the emergence of such risks. However, despite these efforts, their occurrence cannot be ruled out, which may have both general and specific characteristics, related to specific financial instruments or certain financial entities. The presentation of the General Investment Risks that follows is indicative and is made to facilitate the understanding of how the capital market operates and the broader factors that affect the value and price of an investment.

Systemic Risk

The inability of a financial institution to meet its short-term obligations can cause the failure of other financial institutions (including investment firms) or businesses to meet their own obligations when they become due. This creates a risk of chain reactions (domino effect) due to the transmission of insolvency, especially in the context of the operation of payment and securities settlement systems among financial institutions. The involvement of any investment firm in the financial sector exposes it to systemic risk, which, if it occurs, may also be reflected in its clients.

Political Risk

International developments at the political, diplomatic, and military levels affect the course of financial and capital markets. Political developments in a particular country can therefore affect the price of financial instruments traded in that country or the companies domiciled or operating there.

Inflation Risk

The Consumer Price Index affects the real value of invested capital and expected returns.

Foreign Exchange -Currency- Risk

Fluctuations in exchange rates affect the value of an investment made in a currency other than the investor's base currency, as well as the obligations or requirements of businesses.

Interest Rate Risk

Changes in interest rates can affect the trading price of certain financial instruments, such as bonds and derivatives whose underlying value is affected by these changes (e.g., in Futures Contracts on Bonds).

Credit Risk

This is the likelihood of loss due to the inability of a counterparty to fulfill contractual obligations. The impact of credit risk can be manifold: it may affect issuers - and consequently their financial instruments - credit institutions, or other financial entities - and consequently affect their solvency - etc.

Market Risk

This risk consists of the possibility of a financial instrument's value decreasing due to market fluctuations. Consequently, it represents the risk of economic activities directly or indirectly related to the market.

The four most common market risk factors are:

• Equity risk, i.e., the risk of stock prices changing due to various factors, which may affect the fulfillment of obligations of financial entities.
• Interest Rate Risk.
• Currency Risk, i.e., the risk of exchange rate fluctuations (see above under 4).
• Commodity Risk, which concerns the risk of changes in the prices of commodities, such as metals or raw materials.

The change in stock indices or other indices is also a factor taken into account in assessing market risk.

Liquidity Risk

Liquidity risk is a financial risk caused by the absence of liquidity in the market for one or more financial instruments. Lack of demand and supply affects the marketability of financial instruments and makes them vulnerable to speculation and manipulation, negatively affecting the possibility of achieving a "fair price". Liquidity risk is mainly encountered in emerging markets or markets where transactions are conducted in low volumes ("shallow markets").

Operational Risk

Operational risk arises from the implementation of inadequate or failed internal procedures, personnel, and information or communication systems, as well as from external factors such as natural disasters or terrorist attacks, which disrupt transaction settlement systems or reduce the value of assets that are the subject of the transaction (e.g., risk of collapse of the technical systems of a regulated market or an investment firm, risk of inadequate management of a company with securities listed on an exchange, etc.). Legal risk is also included in operational risk.

Regulatory and Legal Risk

This risk arises from changes in the legal and regulatory framework governing markets, transactions in those markets, and the taxation of investments made in a particular market. These changes can affect investments in multiple ways. It also arises from the inability to execute contracts due to legal problems, etc. This can occur due to incorrect legal assessment but also due to legal uncertainty, which arises especially from vague, indefinite, and general legislative provisions. Contracts or other agreements may be deemed void contrary to the initial assessment of the parties, with adverse economic consequences for the contracting parties.

Trading Systems Risk

The Trading System through which trading takes place on regulated markets or Multilateral Trading Facilities (MTFs) is subject to the risk of temporary damage or interruption of operation. Thus, when trading becomes impossible for a significant period, disruption in the smooth functioning of the market and damage to the interests of investors may occur, especially if an investor expects to close an open position.

Settlement Risk

Settlement risk represents a special form of credit risk and arises from the improper fulfillment of obligations of the counterparties participating in payment and settlement systems for transactions on financial instruments, e.g., when one of the contracting parties fails to deliver the securities it has sold and is obliged to deliver or, in the case of purchase, when it does not pay the purchase price of the securities.

Concentration Risk

This is the risk undertaken by an investor who invests all of their available funds in a single financial instrument. It is contrary to risk diversification, where the investor allocates their funds to multiple financial instruments with different characteristics, which include elements of complementarity.

Custody Risk

Custody risk is the risk of loss of assets held in custody due to acts or omissions of the custodian or even due to fraud in case the custodian, to whom the custody of the assets has been entrusted, becomes insolvent.

Counterparty Risk

Counterparty risk is the risk that the counterparty will not fulfill its contractual obligations and will not timely pay the amount it owes. For example, an investor should examine the quality of a bond issuer, i.e., the issuer's ability to pay or redeem (depending on the case). In the case of an options contract, the risk is that the buyer of the option exercises their right, but the seller (writer) of the option fails to fulfill their obligations arising from the contract.

Trading Suspension or Limitation Risk

The application of specific market rules may restrict or suspend the trading of any financial instrument, making it difficult or impossible to carry out transactions.

Country Risk

Country risk arises from the geographic location of each country, its political situation, geopolitical conditions, legal and tax system, macroeconomic conditions, etc.

Force Majeure

Force majeure refers to any random event whose occurrence, by its nature, is unforeseeable and unavoidable for human forces (e.g., war, coup, earthquake, health crisis, predictable government bans, etc.).