← GlossaryInvesting
Risk Premium
A risk premium is the additional return, or price, that compensates for uncertainty. Shares must offer more than safe deposits to attract investors; during a war, oil prices include a premium for the risk of supply disruption.
Why It Matters
When fear rises, risk premiums rise, and prices of risky assets fall.
In India
Oil fell about 13% in a day when a US–Iran ceasefire was agreed in April 2026, as part of its war risk premium disappeared.
Related Terms