Just like any other financial instrument, mutual funds are not without risk. When defined in terms of chances of losing money, the risk in mutual funds is no different than that present in other financial instruments. Still they are relatively safer and a more convenient way on investing.
In mutual funds, you can control risk by choosing a fund that suits your risk profile. On the other hand, picking stocks individually that will both meet your objectives and match your profile can be tough.
A mutual fund portfolio is easier to monitor than equity shares. They also come with less systemic risks. They offer quick liquidity. Most private mutual funds can be redeemed in three to four working days. This too cuts the overall risk associated with investing, often not so visible and hence not accounted by many investors. But the market risk or the risk that exists due to economy-wide factors remains. And there is always the possibility that a fund fail to stick to its pre-determined objectives or invests in securities that alter its risk profile. In which case, the blame goes straight to the fund manager and the Asset Management Company (AMC), which manages the mutual fund.