Business and financial risk

Abstract

This paper examines the distinctions between business risk and financial risk, focusing on their causes, implications, and mitigation strategies. Business risk originates from operational, economic, and market-related factors, while financial risk arises from a company’s financial structure and investment activities. The study outlines key financial risk types - market, credit, liquidity, and operational - and compares them with broader business risks. It emphasizes the importance of identifying and managing both types of risk to ensure organizational resilience and long-term success.