CRA Annual Report 20/21 | Page 57

City of Port St . Lucie , Florida Community Redevelopment Agency Notes to the Financial Statements For the Year Ended September 30 , 2021
NOTE 3 . CASH AND INVESTMENTS ( CONTINUED )
C .
INVESTMENT RISK
Interest rate risk is the risk that changes in interest rates will adversely affect the fair market value of fixed income securities . In order to limit interest rate risk , the City ' s investment policy ( including that of the CRA ) provides for a maximum maturity period of 5 years .
Credit risk for fixed income securities is the risk that the issuer will not fulfill its obligations . Nationally recognized statistical rating organizations (" NRSRO "), such as Moody ' s and Standard and Poor ' s , assign credit ratings to security issuers and issues that indicate a measure of potential credit risk to investors . The City ' s investment policy addresses credit risk by limiting investments to the safest types of securities which are generally those receiving the highest credit ratings from NRSRO .
Concentration risk is the risk of amplified losses that may occur from having a large portion of your holdings in a particular investment , asset class or market segment relative to the overall portfolio . The City ' s investment policy ( including that of the CRA ) requires diversification of investments to minimize potential losses on individual securities .
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