What is 'financial risk' concerned with?

Financial risk is primarily concerned with the potential for losing money in investments or business operations. This includes various forms of risk such as market risk, credit risk, liquidity risk, and operational risk that can adversely affect a company's financial performance. Understanding financial risk is crucial for businesses as it informs their investment decisions, funding strategies, and overall financial health. By properly assessing and managing financial risk, organizations can protect their assets and improve their chances of achieving their financial objectives.

The other options relate to different types of risks: employee liabilities cover human resource risks, non-compliance with regulations involves legal and compliance risks, and political instability pertains to geopolitical risks. While all these factors can adversely impact a business, they do not fall under the umbrella of financial risk specifically, which is why the focus here is on the loss of money directly related to financial activities.