Financial Risk

Financial Risk

What is financial risk?

Financial risk is a possible risk that a company won’t be able to pay back all the money that it owes its creditors. Thereof, investors will lose their invested money. The bigger debt the company has, the higher the potential financial risk of not meeting the obligations.

Any person, who is into investing and trading, should be aware of risks that can occur. It’s something, that companies are exposed to. The consequences of financial risks associated with the financial results of the company are not only financial losses, but also the bankruptcy of the business.

Potential financial rick should be taken into account at the moment of deciding whether to invest in the certain business or not. There are several tools available to determine how risky investing in the particular company is:

  1. Fundamental analysis is the way to calculate the value of the company by analyzing all aspects in general, such as its earnings, assets etc.
  2. Technical analysis is the analysis of the company’s share prices and trading volumes.
  3. Quantitative analysis is the way of defining certain risks using mathematics and statistics.

What types of financial risks exist?

Credit risk A counterparty is unable to repay its debts
Liquidity risk Company’s money flow is poor
Currency risk Company is influenced by currency changes
Foreign investment risk Overseas assets can be in danger
Asset risk The value of the company’s asset can fall

Various types of risks can have different impact on the company in question. So, if it’s impossible to remove the risk completely, it can at least minimize it.

Financial risk analysis is a part of the analysis of the companies’ financial situations, whose actions a person wants to trade. The more stable a company's finances, the more likely that its shares will increase in price in the long run.

Check how to trade stocks with FBS.

Financial risk VS Business risk

Both financial risk and business risk are key factors in making investments, however financial risk is about company’s ability to manage its leverage and debt, whereas business risk is about company’s ability to obtain enough profit to cover its operational expenses.

In other words, financial risk is how company deals with necessary payments, and business risk is how the enterprise functionate as a profitable organization.

Back

2022-02-18 • Updated

Frequently asked questions

  • How to open an FBS account?

    Click the ‘Open account’ button on our website and proceed to the Personal Area. Before you can start trading, pass a profile verification. Confirm your email and phone number, get your ID verified. This procedure guarantees the safety of your funds and identity. Once you are done with all the checks, go to the preferred trading platform, and start trading. 

  • How to withdraw the money you earned with FBS?

    The procedure is very straightforward.  Go to the Withdrawal page on the website or the Finances section of the FBS Personal Area and access Withdrawal. You can get the earned money via the same payment system that you used for depositing. In case you funded the account via various methods, withdraw your profit via the same methods in the ratio according to the deposited sums.

  • How to start trading?

    If you are 18+ years old, you can join FBS and begin your FX journey. To trade, you need a brokerage account and sufficient knowledge on how assets behave in the financial markets. Start with studying the basics with our free educational materials and creating an FBS account. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed.

  • How to activate Level Up Bonus?

    Open Level Up Bonus account in web or mobile version of FBS Personal Area and get up to $140 free to your account.

Deposit with your local payment systems

Be on top of your game

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera