Downside

Downside is a noun referring to the negative, adverse, or disadvantageous aspects of a situation or decision. It denotes the potential for loss, harm, or reduced returns, as opposed to the upside, which refers to potential gains. The term is common in everyday language and in specialized fields such as finance, risk management, and public policy. Etymologically, it combines the word down with side to describe the side associated with downward or negative outcomes.

In finance, downside risk is the potential for earnings or portfolio value to decline from a baseline or target level. It is a core component of risk assessment and is often considered alongside upside potential. Methods used to analyze the downside include downside deviation or semi-variance to capture variability of negative returns, stress tests, and scenario analysis. Investors and managers may employ downside protection strategies such as hedging, diversification, or insuring against losses to limit exposure.

In policy analysis and project evaluation, the downside refers to costs, implementation challenges, or negative externalities that accompany a proposed action. Decision makers balance upside benefits with the downside to judge overall viability. The term is also used in everyday evaluation to summarize the disadvantages of a choice, product, or plan. See also upside, risk, loss, downside risk.