Post by account_disabled on Mar 6, 2024 5:13:42 GMT 1
In a market like the current one, not taking financial risks seems impossible. In this sense, as Mark Zuckerberg points out : “ The biggest risk you can take is not taking any risks ... In a world that is changing so quickly, the only strategy that guarantees failure is not taking risks.” The truth is that financial markets constantly face various financial risks due to various macroeconomic forces . For this reason, it is essential to know the dangers and how to protect yourself. Although this will not eliminate the risk, since it is linked to the uncertainty about what may happen in the future, it can mitigate its damage and reduce the chances of obtaining a negative result. CTA - Text financial-risks What are financial risks? When we talk about financial risks we are referring to any business activity that involves uncertainty and, therefore, may cause some negative financial consequence for the organization. Therefore, this situation can cause the loss of capital.
Financial risk is linked to the profitability of a company. So, for example, the more debt a company has, the greater the potential financial risk . For this reason, before making an investment, it is essential to calculate the risk involved. Types of financial risks The main financial risks are market, credit, liquidity, operational and liquidity risk. Below, we provide you with more details about each of them: Market risk Market risk arises when losses occur in the value and position of a Europe Mobile Number List company's asset due to market fluctuations . That is, this type of financial risk is generally associated with a change in prices or customer consumption patterns. In this way, it is a financial risk that appears due to the economic uncertainties inherent to the financial system, which can affect both the performance of a specific company and many of them . We can find several types of market risks: Exchange risk: is the risk that appears when making investments that involve a change in the currency; hence the importance of ensuring that the currency is stable and is not at risk of depreciation.
Interest rate risk: has to do with the rise or fall of interest rates. Market risk: refers to the change in value that occurs in stocks, bonds, etc. An example of market risk would be that which could be encountered by a company that settles in a country with high inflation, since the company would face a high interest rate in its movements. Credit risk Credit risk has to do with the inability of one party to pay the debt in accordance with contractual obligations . An example of credit risk would be what a company would suffer in the event of a default , that is, when one of its clients does not pay for its service and the company must face a decrease in cash flow by assuming the expenses of the service provided. Likewise, if the client cannot make payments on time, the company will be forced to make claims, losing time and money in the process. Operational risk Operational risk occurs when financial losses occur due to poor management , lack of internal controls within the company itself or worker training , technological failures or human errors that affect commercial production or provide undesirable results. This type of financial risk is what occurs, for example, when software that is not updated is used or, on the contrary, when the necessary training is not provided to workers so that they are up to date with new developments and changes in systems.