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Business risk and high financial risk

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Total risk is equal to business risk plus financial risk. Companies then manage total risk by balancing the two. A low risk business like a bank, can take a lot of financial risk. Banks are often financed with up to 92% debt. Deposits are amounts owed by the bank and therefore a form of debt. Up until the financial crisis, only a handful of banks had failed in the previous 12 months. On the other hand young high tech companies know that they have high business risk. These firms fail all the time. Therefore they finance with little or no debt.

What industry has both high business risk and high financial risk?

Reference no: EM13892651

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