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.
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Under the second model of control, capitation or incentive alignment, the health plan absorbs the financial risk of illness from patients against payment of a premium, but then shifts that risk partly or wholly to health care providers, who receive a flat capitation payment for that task.
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At the same conference, outgoing Securities and Exchange Commission Chief Accountant Walter Schuetze suggested entities' public disclosures about all kinds of financial instruments "be supplemented with information that brings the entire risk management function together so that investors can understand better how the company manages its overall financial risks.
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Regulatory matters related to the acceptance of financial risk.
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