What term describes the risks arising from a company's financial activities?

The term "financial risks" is used to describe the potential for financial loss related to a company's financial activities. This encompasses various types of risks that can arise from how a company manages its assets, liabilities, investments, and capital activities. Key components of financial risks include market risk (changes in market prices), credit risk (the possibility of a loss resulting from a borrower's failure to repay a loan), liquidity risk (the risk of not being able to meet short-term financial obligations), and operational risk (losses from failed internal processes or systems).

Understanding financial risks is crucial for a company to effectively strategize and implement risk management practices. By identifying and assessing these risks, businesses can make informed decisions about investments, funding, and overall financial strategy to mitigate potential losses. This is essential for maintaining the organization's financial health and achieving its objectives.

The other terms listed describe different concepts within corporate financial practices. Financial liabilities refer to obligations a company must settle in the future, such as loans or bonds. Firm commitments are contractual obligations that a company has entered into, while foreign currency pertains to risks and transactions associated with dealing in currencies other than the company's domestic currency. While these elements can involve financial risks, they do not encapsulate the broader idea of risks arising