8. What are the different kinds of risk in finance. Solution Risks in finance can be braodly categorized into 4 types: Market Risk : It refers to risk due to fluctuations/changing conditions of the market in which a company has interests in. Some of the factors that impact are Political Instability, Climate Disasters, Civil Unrest etc. Credit Risk : Risk incurred by the business by extending credit to its customers or companies own credit risk to its suppliers. All business take this risk when they enter into a financial transaction with its customers or suppliers. Companies should be able to handle these risks by making correct forecasts if cash needed and also making sure the payments from customers come on schedule. Liquidity Risk: It is the risk associated with the liquid nature of the companies assets. How easily the company is able to sell its assets to get cash in case of any crisis. There could be risk for cash for the day to day running of the company as well where it might need to sell some assets to keep running. Operational Risk: This risk refers to the risks associated with the day to day opearations of the company. Risk like lawsuits filed on the company, eployee frauds/errors, business strategy failures etc all come under this type of risk..