What is the regulatory definition for risk?

Regulators typically define risk as the potential that events, expected or unanticipated, may have an adverse effect on an institution's net worth and earnings. The seven most common categories of risk are Credit, Interest Rate, Liquidity, Operational/Transactional, Legal/Compliance, Strategic, and Reputation. Remember that any product or service may expose an institution to multiple risks; these categories are not mutually exclusive.