All of the risks which are not part of the broad universe of financial risks (mainly, market risk, credit risk and liquidity risk) in an entity. Non-financial risks do not relate directly to the financial performance or prospect of a business. Examples of non-financial risks (NFRs) are the risks arising from cyber-attacks, compliance breaches, environmental impact (negative), and so on. Risks (operational risks) associated with operational activities may also be considered part of the universe of non-financial risks.
However, all risks, financial and non-financial, can ultimately produce financial consequences. If not properly managed and mitigated or transferred (insured), non‑financial risks can result in drastic financial implications for firms and their stakeholders (investors, customers, and employees).
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