Risk of ruin is a concept in gambling, insurance, and finance relating to the likelihood of losing all one's investment capital or extinguishing one's bankroll below the minimum for further play.
So even if there is a major crash affecting the shares on any one exchange, only a part of the investors holdings should suffer losses.
Other strategies for minimising risk of ruin include carefully controlling the use of leverage and exposure to assets that have unlimited loss when things go wrong (e.g., Some financial products that involve short selling can deliver high returns, but if the market goes against the trade, the investor can lose significantly more than the price they paid to buy the product.)
[4] Random walk assumptions permit precise calculation of the risk of ruin for a given number of trades.
For example, assume one has $1000 available in an account that one can afford to draw down before the broker will start issuing margin calls.
To see a set of formulae to cover simple related scenarios, see Gambler's ruin (with Markov chain).