The Major Kinds of Financial Risk That Companies Face
Companies face market risk due to fluctuations in the value of investments, such as stocks and bonds, in the financial markets.
Companies face credit risk when they lend money to individuals or organizations and do not receive the expected payment.
Companies face liquidity risk when they cannot meet their financial obligations due to a lack of liquid assets.
Companies face operational risk when their business operations are disrupted due to a variety of reasons, such as natural disasters, cyberattacks, and human error.
Companies face cybersecurity risk when their sensitive information, such as financial data, is compromised by cyber criminals.
Supply Chain Risk
Companies face supply chain risk when disruptions in their supply chain, such as natural disasters or supplier bankruptcy, negatively impact their operation
Foreign Exchange Risk
Companies face foreign exchange risk when they do business in foreign countries and the value of their currency changes relative to the currency of the country they are doing business in.
Companies face inflation risk when their costs increase due to inflation, which erodes their purchasing power.