The risk that arises from unfavorable changes in the price of an asset/ investment. It may also involve the risk that the fair value of a financial instrument will fluctuate due to changes in market prices.

For example, price risk may refer to the risk of potential loss in the value of a security due to a drop or potential drop in its market price. Price risk results from a host of factors such as earnings volatility, actual or prospect, in addition to other firm-specific factors (bad management), and industry-specific factors such as structural changes in prices, etc.

Examples of subcategories of price risk include commodity price risk and equity price risk.

Price risk can be mitigated by an arsenal of tools such as diversification, hedging, market timing, etc.

In the specific context of mortgages or mortgage pipeline, price risk is a component of the so-called pipeline risk (mortgage pipeline risk). It arises from the probability that, prior to closing, the market price of loans (i.e., prevailing interest rates) may decrease, and as a result the borrower would be able to obtain an alternative loan with a lower interest rate.