All investments in mutual funds and securities are subject to market risks and the NAV of the schemes may go up or down depending upon the factors and forces affecting the securities market.
Price Risks: Fall in the prices of the underlying shares/bonds lead to a lower NAV.
Liquidity Risks: Markets being shut for a long period could lead to the suspension of repurchase / redemption of investments.
Default Risk: Bonds of a particular company defaulting on repayment affecting income/debt/hybrid funds.
Credit Risk: Bonds of a particular company being downgraded by the rating agencies cause lower prices.
The best thing about mutual fund is that in reality most if not all financial instruments carry these risks but public is ignorant about it. For example, bank deposits are guaranteed only up to one lakh rupees. Company FDs carry default risks. Price risk is the only additional risk of investing in a MF. This is true for any investment that has a market price (Real estate, Shares, Gold, etc.,).