According to the risk pyramid, which of the following is categorized as high risk?

The classification of commodities as high risk is accurate based on the principles of the risk pyramid. The risk pyramid categorizes investments based on their inherent risk and potential return characteristics. Commodities, which include physical assets like oil, gold, and agricultural products, can be highly volatile due to factors such as market demand, supply chain issues, geopolitical events, and economic shifts. This volatility makes commodity investments risky compared to more stable options.

In contrast, investments such as utility stocks, cash, and savings accounts are generally considered lower risk. Utility stocks, while they can fluctuate in value, are often viewed as more stable because they are linked to essential services that people need regardless of economic conditions. Cash and savings accounts are associated with low risk because they are insured and protected from market fluctuations, offering lower but stable returns. This clear differentiation in risk levels illustrates why commodities sit at the high-risk level within the risk pyramid.