1. Explain how understanding of the various levels of operating risk and financial risk influence credit risk analysis.
2. Can operational risks influence financial risks and vice versa?
3. As a relationship manager, the fastest growing customer in your portfolio does not have a full-time qualified and experienced finance manager. Whilst profitability is acceptable, high interest cost, poor collections, undue levels of stock and high cost of capital are evident. Although the business has grown enough to warrant an experienced finance manager, the owner insists that finance is too important to be entrusted to a third party and believes he can handle the finance function himself. How would you judge the finance risk of this customer?