Types of Financial Risks Quiz

Financial Risk is the likelihood that the company might incur a ______ loss

Non-Financial Risk is a type of risk that doesn't involve potential ______ loss

External Events can lead to a decline in sales revenue and operating ______

Credit Risk is the risk that a counter-party might fail to pay its account on the ______ date

A major customer's bankruptcy can lead to a decline in cash ______

A pandemic like COVID19 can cause disruption in business operations and a decline in ______ and profit

Credit Risk is the possibility that customers of the company may not be able to pay on the due date. This is an example of _______ risk.

Operational Risk is the possibility of a disruption in the operation of the business due to machine breakdowns, natural calamities and other causes. This is an example of _______ risk.

Bankruptcy of a major customer is an example of a risk impacting the objective of reducing bad debts. This is an example of _______ risk.

_______ events are those that happen within the organization.

_______ events are those that happen outside the organization.

An increase in production and operating costs is an example of an event that can adversely affect the achievement of enterprise objectives. This is an example of _______ risk.

Credit risk is present in all activities where there is an expectation of returns or ______

Liquidity Risk – the risk that the business will be unable to meet its financial obligations as they fall due because of insufficient cash, inability to liquidate assets, or obtain adequate funding given a short period of time. This also includes the possibility that the business may not be able to convert non-cash assets such as investments into cash on ______ notice.

Market Risk – is the risk of volatility in the market brought about by factors of interest rate, foreign currency, and market prices. Interest rate risk – is the potential decline in earnings and capital arising from changes in interest rates in the market. This risk generally occurs because an entity may have a disproportionate amount of fixed and variable interest-rate instruments on either side of the ______ sheet.

Foreign Currency Risk – the risk that fluctuations in exchange rates could affect the profit of the ______

Price Risk – the risk that changes in specific prices (stock price, price of other investment) could affect the profit or cash flow of the ______

Business Risk risk of loss that is naturally incurred by owning or operating a ______