Bankruptcy Risk

The risk that a company will be unable to meet its debt obligations. Often referred to as "default" or "insolvency risk". 



|||This is a risk that both equity- and bondholders take when deciding to invest in a company. Aside from looking at overall profitability, analyzing a company's debt obligations and ability to repay, agencies like Moody's and Standard & Poor's attempt to determine this risk by giving bond ratings.