Market Risk

Definition of market risk

Market risks are those arising from any of the markets that a company operates in. Most common examples are those risks from resource markets (inputs), product markets (outputs) or capital markets (finance).


Why non-compliance increases market risk

The lack of a fully compliant committee structure (such as having a non-compliant audit committee) erodes investor confidence in the general governance of a company. This will, over time, affect share price and hence company value. Low company value will threaten existing management and make the company a possible takeover target. It will also adversely affect price-earnings and hence market confidence in the company’s shares. This will make it more difficult to raise funds from the stock market.


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