Risks Associated with Preferred Shares in Volatile Markets

A company has issued a series of preferred shares that offer both fixed and variable dividends based on performance metrics. The fixed dividend is 5% of the par value, and the variable component is tied to the company's net income. When calculating the dividend yield from these shares, consider the implications of both components based on potential future company performance.

If the company is performing well and its net income increases, the variable dividend component may significantly enhance the total yield for preferred shareholders. However, if the company underperforms, the fixed yield becomes more critical for investors. Given this context, what is the primary risk associated with holding these preferred shares in a volatile market?