What is financial stress?
Financial stress can be defined as “a sustained pattern of financial difficulty or financial loss that results in a substantial financial burden or expense on the financial and/or personal well-being of the consumer or on the economy as a whole.”
It can be felt across a wide range of sectors, and affects many different parts of the economy, including small business owners, retirees, families and individuals.
The American Society of Actuaries (ASA) says the term “financial stress” is often used to describe a range of situations where individuals, businesses and governments face financial pressure.
But the ASA’s definition is not necessarily the most accurate, and there are a range.
Here’s a look at some of the common financial stress situations that can impact an entire business or financial institution.1.
Unreliable income reporting3.
Inability to meet payments4.
Debtors in bankruptcy5.
Unusual or extreme fluctuations in assets and/ or liabilities6.
Failure to meet income tax or other reporting requirements7.
Unnecessary, uncollectible debts8.
Unsatisfactory credit scores9.
Loss of confidence in a financial institution10.
Unresolved conflicts of interest