Insolvency risk

Insolvency risk

The risk that a firm will be unable to satisfy its debts. Also known as bankruptcy risk.

Bankruptcy Risk

The risk that an individual or especially a company may be unable to service its debts. Bankruptcy risk is greater when the individual or firm has little or no cash flow, or when it manages its assets poorly. Banks assess bankruptcy risk when considering whether to make a loan. It is also called insolvency risk.