Downside risk is the financial risk

Financial risk

Financial risk an umbrella term for multiple types of risk associated with financing, including financial transactions that include company loans in risk of default. Risk is a term often used to imply downside risk, meaning the uncertainty of a return and the potential for financial loss...

 associated with losses. That is, the risk of difference between the actual return and the expected return (when the actual return is less), or the uncertainty of that return.

Risk measure

Risk measure

A Risk measure is used to determine the amount of an asset or set of assets to be kept in reserve. The purpose of this reserve is to make the risks taken by financial institutions, such as banks and insurance companies, acceptable to the regulator...

s typically quantify the downside risk, whereas the standard deviation

Standard deviation

Standard deviation is a widely used measure of variability or diversity used in statistics and probability theory. It shows how much variation or "dispersion" there is from the average...

 (an example of a deviation risk measure

Deviation risk measure

In financial mathematics, a deviation risk measure is a function to quantify financial risk in a different method than a general risk measure...

) measures both the upside and downside risk.