Financial Risk Management looks at the risks associated with the financial stability of organisations.

All organisations need to pay attention to finances despite how profit orientated their business culture is. Even not-for-profit organisations such as charities need to plan and manage their finances in order to continue operating.

When referring to Financial Risk Management we are concerned with looking at:

• the financial structure of the organisation
• the financial transactions the organisation makes
• the financial systems already put in place

(From Business Link – Managing Risk)

With Financial Risk Management we are looking at where finances are vulnerable. This could be for a number of reasons from either internal factors such as poor control over cashflow or external factors such as changes in interest rates. Changes in either of these uncertainties can reflect positively and negatively on financial stability which is why organisations should prepare for their potential outcomes.