Financial Risk refers to the potential for loss or negative financial impact on an individual or organization due to various factors. It encompasses several key categories, including market risk (fluctuations in asset prices), credit risk (default by borrowers), liquidity risk (inability to convert assets to cash), operational risk (loss from internal failures), regulatory risk (impact of legal changes), and reputational risk (damage to public perception). Effective management of financial risk involves identifying, assessing, and mitigating these risks to safeguard financial health and ensure stability.

Basel scope:

• Pillar 1
• Pillar 2

Capital requirements:

Mitigated by Capital

Related Links:

•       Basel Framework

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Taxonomy subtypes:

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Credit Risk
Market Risk

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Liquidity Risk