MANAGEMENT

Detailed explanation-1: -Financial risk is the chance that a firm would fail to meet its payment obligations. Interest & Repayment on borrowed funds have to be paid regardless of whether or not a firm has earned a profit. The risk of default on payment is known as financial risk.

Detailed explanation-2: -Bankruptcy risk, or insolvency risk, is the likelihood that a company will be unable to meet its debt obligations. It is the probability of a firm becoming insolvent due to its inability to service its debt. Many investors consider a firm’s bankruptcy risk before making equity or bond investment decisions.

Detailed explanation-3: -An FCCR of less than 1 (<1) means the company lacks sufficient profitability to cover its fixed charges.

Detailed explanation-4: -Compared with financial risk such as credit or market risk, operational risk is more complex, involving dozens of diverse risk types. Second, operational-risk management requires oversight and transparency of almost all organizational processes and business activities.