business risk(redirected from Business Risks)
The risk that a company will go bankrupt. Every company carries the business risk that it will produce insufficient cash flow in order to maintain operations. Business risk can come from a variety of sources, some systemic and others unsystemic. That is, every company has the business risk that the broader economy will perform poorly and therefore that sales will be poor, and also the risk that the market simply will not like its products.
The risk that a business will experience a period of poor earnings and resultant failure. Business risk is greatest for firms in cyclical or relatively new industries. Business risk affects holders of stocks and bonds, since a firm may be unable to pay dividends and interest.