Financial risk in supply chains can be defined as the potential financial losses that arise due to unexpected events or factors. It is a measure of how well prepared a company is to handle situations such as changes in raw material costs, market demands, and global political climates. Companies must have an efficient risk management strategy to identify these risks and take steps to mitigate them. When managed correctly, companies can avoid the pitfalls of financial loss and enjoy significant rewards from improved operations and increased efficiencies in their supply chains.