Risk Assessment in Green Investments: A Comparative Study with Traditional Investments

Abstract Investments in eco-friendly projects such as renewable energy, sustainable development and climate change growth are becoming common with the changing global focus on green growth. However, green investments have some dissimilar risks such as regulatory, technological and market risks. Factors that do not make them the same as a traditional investment. At the same time, green investments can offer substantial returns alongside positive impact on the environment. In contrast, investments in well established industries are done under more strict regulations and technologies, but headwinds like increasing societal norms to ditch fossil fuels makes them climate risk prone. There is a noticeable risk shift in the comparison of both green and traditional investments,they each have different components that risk them thus, custom risk management methods are required. This research examines the substantial regulatory, technological, market, ecological, and behavioral risks that come attached with both green and other forms of investment. Findings emphasized the cultivation of diversification, proactive assessment of market and policy developments and the application of highly sophisticated tools such as AI to support managerial decisions. If these risks are dealt with properly, investors can improve their portfolio by promoting stability, achieving the needed level of environmental sustainability, and simultaneously fulfilling financial goals. This research advances the existing discourse on the sustainable investment principles by bringing in useful information that can assist investors in a fast changing world of finance technologies.