Bharti AXA INSURANCE GLOSSARY Financial risk Financial risk A financial risk is the possibility that a financial stakeholder would lose money due to an uncertain event. A financial risk typically refers to a speculative risk and not a pure risk (like fire or flooding). For example, a fluctuation is a currency exchange rate or a change in the value of an asset backing a security is a financial risk. Traditionally, a financial risk is mitigated through diversification and hedging strategies. Some of the common forms of financial risks are credit risk, asset-backed risk, liquidity risk, equity risk, currency risk and foreign investment risk. Here are some examples: A government faces the risk that it may default on the bonds issued if it is unable to control the monetary policy Corporates may default on their debt if the market conditions are unfavourable and they run into a liquidity crunch An individual may fail pay a debt in case of a medical emergency or loss of income due to any other cause Financial markets face a risk due to macroeconomic factors like change in the market interest rates or a policy change by the government. Request Call Back Category * - Select -CarTwo WheelerHealthTravelPersonal Accident Buy Renew Claim submit Related Posts Disclaimer : The information published on this website is for the public's reference only. Content of this information is to provide an overview of your Travel needs and should not be relied upon for personal, medical, legal or financial decisions and you should consult an appropriate professional for specific advice. Bharti AXA General Insurance Company Limited makes no representations about the suitability, reliability, timeliness, and accuracy of the information, travel, services, or any other items mentioned on this subject for any purpose whatsoever.