<\/p>\n
Financial and economic risks are part of the daily reality of businesses, regardless of the industry.\u00a0Regardless of the size of the organization, business leaders must devote time to planning the financial strategy, putting in place an optimal financial structure and analyzing the market, the competition and future trends in order to ensure sustainable growth.<\/p>\n
Financial risk<\/strong>\u00a0refers\u00a0\u00a0\u00a0to the possibility of losing money or the uncertainty of the performance of an investment.\u00a0Financial or insolvency risks are generally due to instability in financial and credit markets or the inability to meet financial obligations.<\/p>\n Financial risk refers to the risk associated with any form of financing.\u00a0Risk can be understood as zero return on investment or as less profit than expected.<\/p>\n Credit risk represents the possibility of incurring financial losses when one of the parties to a financial contract fails to meet its payment obligations.\u00a0The breach of contract is usually caused by the decrease in the creditworthiness of the borrowers.\u00a0However, it can also be linked to bankruptcy, losses, liquidity problems or even a lack of willingness to pay.\u00a0This type of risk is usually associated with banking institutions, but it also occurs in businesses.\u00a0For example, when a company makes a forward sale and the customer does not pay the agreed amounts.<\/p>\n Liquidity risk<\/strong>\u00a0arises\u00a0\u00a0\u00a0when one of the parties to a financial contract has assets, but does not have enough liquidity to meet its financial obligations.\u00a0One possible cause is poor cash flow management.\u00a0If a company is unable to sell its assets, has regular losses, or cannot cover its debts, it could find itself in a situation of illiquidity.<\/p>\n This type of risk is linked to financial markets.\u00a0There are\u00a0\u00a0four types of market risk<\/strong>\u00a0:<\/p>\n Interest rate risk<\/strong>\u00a0is\u00a0\u00a0\u00a0associated with the rise or fall of interest rates at an inopportune moment.\u00a0For example, if you have a mortgage and your interest rate increases, your monthly payment will be higher or you will have more monthly payments to pay.<\/p>\n Currency risk<\/strong>\u00a0is\u00a0\u00a0\u00a0associated with fluctuations in the exchange rate.\u00a0An investment could lose value following a negative fluctuation.<\/p>\n Equity risk<\/strong>\u00a0refers\u00a0\u00a0\u00a0to the possibility of losing capital between the time an asset is purchased and its resale.<\/p>\n As the name suggests,\u00a0\u00a0commodity risk<\/strong>\u00a0\u00a0refers to changes in commodity prices following political or regulatory changes.\u00a0Companies in the energy sector as well as those involved in the transformation or production of raw materials are particularly affected by this risk.<\/p>\n Operational risk<\/strong>\u00a0arises\u00a0\u00a0\u00a0when a contingency results in losses to a business.\u00a0This type of risk is related to technological errors, human errors, faulty internal processes or external events (fraud, disasters, etc.).\u00a0It refers to the risk associated with deficiencies or failures in the processes and resources of an organization’s day-to-day activities.\u00a0It is an inherent risk of doing business, but it can be managed.<\/p>\n Risk management begins with identifying the financial risks that could affect your business.\u00a0You can start by analyzing the balance sheet of the company to get an overview of your liquidity, debts, interest rate risk, risk of commodity price volatility, etc.\u00a0You should also review the income statement and cash flow statement to see how your results fluctuate over time.<\/p>\n Assessing your return on investment gives you valuable insight into your business and financial management.\u00a0This strategy minimizes your financial risks since it allows you to analyze the level of risk associated with each investment and therefore make decisions involving less risk.<\/p>\n The implementation of financial modeling makes it possible to predict the financial performance of a company as well as the evolution of its financial statements.\u00a0The forecasts are based on real data and take into account different hypotheses and scenarios in order to draw a realistic portrait.\u00a0It allows companies to make informed decisions.<\/p>\n Financial diversification is a strategy that involves investing in different asset classes.\u00a0Companies should have a diversified portfolio to reduce financial and economic risks.\u00a0Organizations should invest in high-risk and low-risk assets.<\/p>\n Cofinia<\/a>\u00a0\u00a0specializes in financial optimization for small and medium enterprises.\u00a0Our services include the creation of financial projections, the realization of financial modeling, the evaluation of investment projects as well as the analysis of the profitability of your products and services.\u00a0Do not hesitate to\u00a0\u00a0contact<\/a>\u00a0us \u00a0if you have any questions or if you would like a free quote!<\/p>\n We provide you with completely free tools to help you familiarize yourself with the management tools<\/p>\n Make a telephone appointment with us to learn more about what we offer as a service and how we can help you.<\/p>\n Follow us on our social networks to learn more about our company, our values \u200b\u200band our services.\u00a0facebooktwitteryoutube<\/p>\n","protected":false},"excerpt":{"rendered":" Financial risk management in business Financial and economic risks are part of the daily reality of businesses, regardless of the industry.\u00a0Regardless of the size of the organization, business leaders must devote time to planning the financial strategy, putting in place an optimal financial structure and analyzing the market, the competition and future trends in […]<\/p>\n","protected":false},"author":9,"featured_media":13697,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[3],"tags":[],"class_list":["post-13696","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/posts\/13696","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/comments?post=13696"}],"version-history":[{"count":0,"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/posts\/13696\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/media\/13697"}],"wp:attachment":[{"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/media?parent=13696"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/categories?post=13696"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cofinia.ca\/en\/wp-json\/wp\/v2\/tags?post=13696"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What are the types of financial risk?<\/h2>\n
1) Credit\/counterparty risk<\/h3>\n
2) Liquidity risk<\/h3>\n
3) Market risk<\/h3>\n
\n
Interest rate risk<\/h4>\n<\/li>\n<\/ul>\n
\n
Risk of change<\/h4>\n<\/li>\n<\/ul>\n
\n
Equity risk<\/h4>\n<\/li>\n<\/ul>\n
\n
Commodity risk<\/h4>\n<\/li>\n<\/ul>\n
4) Operational risk<\/h3>\n
Tips for managing business risk<\/h2>\n
1) Identify potential risks<\/h2>\n
2) Calculate the return on investment (ROI)<\/h2>\n
3) Carry out the financial modeling of your activity<\/h3>\n
4) Diversify your risks<\/h3>\n
5) Consult a financial expert<\/h3>\n
Stay tuned and don’t miss any of our new publications<\/h2>\n
Access our Tools<\/h3>\n
Make an appointment!<\/h3>\n
Follow us<\/h3>\n