This is a great question and really gets to the crux of how different people define risk.
I look at the return on cash deposits over the last 100 years or so and see that I would have barely kept pace with the cost of living.
I have very little uncertainty with cash deposits. I know in advance that in real terms I will probably get my money back at the end of any particular term but with no real growth.
I therefore have the opportunity cost of being on deposit over long periods of time compared to what I would expect from investing in say stocks where I should expect an average real return of about 6.5%pa.
Of course, when investing in stocks I have volatility (another measure of risk) which as an investor I should expect and in fact welcome, since it is the risk that drives my returns and I should expect this to be +\- 20% some 68% of the time and +/- 40% say 95% of the time.
I should also expect losses like we saw in 2008 about 2.5% of the time or on average about one year in 40.
Everyone should understand that stocks do better than cash on average over the long-term but not every year and what's more stocks can go sideways for very long periods of time.
The loss adverse saver doesn't like this roller coaster so shelters in cash in the bank.
But of course banks are just another form of corporation. Another manifestation of the stock market if you like.
So the same principles apply namely that risk and return are related. This is why rabo pays 2% on deposits when Anglo was paying 3%.
It also explains why people were buying US Treasury Bills in 2008 with zero interest. They were more concerned with getting a return of their money than a return on their money.
So where does this leave the question asked?
Let's consider a real example:
Nationwide UK Ireland is rated A+ by Standard and Poors and deposits up to £85,000 are guaranteed by the UK taxpayer.
The UK was warned today that it could lose the AAA rating due to the ongoing question Mark over the public finances.
So if you are worried about having all your eggs in one basket(and you should be) and you are worried about default risk (and you should be) and if you want a reliable hedge against inflation over the long term (and you should) then a bank account rated A+ doesn't score very well.
I would suggest a global (eggs spread) short term (less interest rate risk and good inflation hedge) high credit (AA+ average - so less default risk and a credit rating which is better than many banks operating in Ireland) Fixed Interest fund.
Of course investing in bonds carries some investment risk and the return may be less than the amount invested. Bank accounts don't have this risk (unless they go bust and you hold more than is guaranteed by the State) and so are considered less risky.
I would suggest that it depends how you define risk.