What is the difference between business risk&financial risk?
Business and financial risk are two of the main risks in operating a company. While they are interrelated, they are distinct business concepts, one relating to the financial strength of a specific company and one referring to the overall operating environment of a business.Financial RiskFinancial risk, which is also known as credit risk or default risk, refers to the ability of a company to pay off its debt obligations, including loans and bonds.Business RiskBusiness risk is the risk of a company operating profitably in a given business environment, due to competitive pressures or poor overall economic conditions.InterrelationshipsA deteriorating business environment may force a company to take out additional loans to finance the growth of its business, which would increase the financial risk of the company.
