Corporate Risk & Valuation · Entry 07 of 71
What Is Financial Risk?
Debt burdens, interest rates, and leverage issues

Core Definition
Financial Risk refers to the possibility of losing money due to factors like market volatility, liquidity issues, or high levels of debt.
Key Implications
- Can lead to investment losses and cash flow problems: Over-leverage can leave a company unable to meet debt service obligations.
- Impacts a company's financial health and stability: High financial risk raises the default rating and restricts access to capital markets.