Explanation:
The correct answer is C.
Bankruptcy risk refers to the likelihood that a company will be unable to meet its debt obligations, leading to insolvency and potential bankruptcy proceedings. Choice C accurately describes this risk, as it focuses on the company's inability to pay its creditors and investors.
Choice A is incorrect. This defines reputational risk. Choice B is incorrect. This defines cyber risk. Choice D is incorrect. This describes credit risk (or default risk) from the perspective of the lender, whereas bankruptcy risk specifically concerns the borrowing entity's overall solvency.
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Q.5298 Which of the following definitions of bankruptcy risk is correct?
A
The potential risk of harm to a company's brand or reputation resulting from negative public perception or publicity.
B
The potential risk of financial, operational, or reputational harm to a company resulting from cyber threats or attacks.
C
The likelihood that a company will become insolvent and unable to meet its financial obligations to creditors and investors.
D
The likelihood that a borrower will default on their debt obligations, resulting in financial losses for the lender.
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