financial risk(redirected from Financial Risks)
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.
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.