What is financial and business risk?

Financial risk refers to the potential for loss due to factors affecting a company's financial health, such as market volatility, interest rate changes, or credit risks. Business risk, on the other hand, encompasses the uncertainties and potential losses associated with a company's operational decisions, market competition, and overall industry conditions. Both types of risk can impact a company's profitability and sustainability, necessitating effective risk management strategies to mitigate their effects.