financial risk

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Financial risk

The risk that the cash flow of an issuer will not be adequate to meet its financial obligations. Also referred to as the additional risk that a firm's stockholder bears when the firm uses debt and equity.

Financial Risk

Any risk that comes from giving money to another person or entity. For example, if one lends money, one carries the financial risk that the borrower will not repay it. A venture capital firm carries the financial risk that its investments will never become profitable. Likewise, an investor who purchases an asset carries the financial risk that he/she will be unable to re-sell it.

financial risk

The risk that a firm will be unable to meet its financial obligations. This risk is primarily a function of the relative amount of debt that the firm uses to finance its assets. A higher proportion of debt increases the likelihood that at some point the firm will be unable to make the required interest and principal payments.
References in periodicals archive ?
The central bank of China has called for joint regulatory efforts to curb financial risks.
Corporate Treasurers, CFOs, CROs, CEOs, Financial Directors, traders and anyone who deals with the management of financial risks in non-financial companies
The deep experience of treasurers in managing financial risks such as transactional, interest rate, counterparty and insurance makes their leadership crucial.
Such strategies leave them and their shareholders especially vulnerable to the increased financial risks and missed market opportunities posed by climate change," says IRRC's Doug Cogan.
By creating a single framework to examine all corporate exposures, including market risks, financial risks and operational risks, companies gain a greater appreciation of aggregate corporate risk.
Perhaps in recognition of this concern, some observers have begun to steer the public discussion of derivatives to broader issues of how entities manage financial risks.
LONDON -- As the global economy stumbles, corporations face the increasing challenge of identifying and managing the multitude of financial risks inherent in the market today - from commodity volatility to the potential impact of the Euro Crisis.
Stock markets are overreacting to the worldwide economic slowdown and should be more concerned about mounting financial risks in Asia, according to an analysis released by The Conference Board.
Regulatory and accounting reporting of financial risks.
Given the substantial impact of pension plan financial performance on corporate financial results, and the uncertainties related to the changing regulatory environment, pension plan sponsors should reevaluate their retirement financial management policies to ensure their effectiveness in managing both the level of expected program costs and corporate financial risks," Kerstein added.
The treasurer, as the owner of the processes to hedge financial risks, often becomes, explicitly or implicitly, the owner of the processes to manage financial risks.
Despite the new law's more stringent funding requirements, most of the survey respondents continue to view the costs and financial risks associated with their pension plans as manageable," said Bill Gulliver, principal and chief actuary for Towers Perrin.

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