Business risks are the possibility of acommercial entity making losses or inadequateprofits due to uncertainties, for example: changes in tastes, changing preferences ofconsumers,staff (de)motivation,strikes, increasedcompetition, changes in government policy, obsolescence etc. Everybusiness organization faces variousrisk elements.[1]Business risk implies uncertainty in profits or danger of loss and events that could pose unforeseen risk in the future which may cause acompany to fail.[2][3][4]Voluntary andnot-for-profit organisations may face similar risks.[5][dead link]
Business-risk factors may arise in different forms depending upon the nature of a company and of its activities. Amanufacturing company, for example, may face risks affecting production, risks due to irregular supply ofraw materials, machinery breakdown, labor unrest, etc. Inmarketing, risks may arise due to fluctuations in market prices, changingtrends andfashions, errors in sales-forecasting, etc. In addition, there may be loss of assets of the firm due to fire, flood, earthquakes, riots or war and political unrest, which may cause unwanted interruptions in the business operations.
Business risks can have two major forms:internal risks(risks arising from the events taking place within the organization) andexternal risks (risks arising from the events taking place outside the organization):[6][7][8]
Though corporate entities may have an image ofrisk aversion, they may continue to stake their reputations and indulge in theirgambling propensities bysponsoring competitivesports-teams.
Many business risks can interrelate. With the onset of the globalCoronavirus pandemic in 2019, many firms fell victim to events arising as a result of the damage to thestock market. A lot of internal factors became prominent, including the much-needed transition toonline communication within a business.[9]
Change in the stock market in early 2020 highlights a specific example of external risks. Between late February and late March, out of 22 stock-market trading-days, there were 18 drasticstock-market jumps. Stock-market jumps may indicate lower stock stability and higher volatility.[10] The uncertainty of whether or not a stock is secure indicates a risk of any certain business.[citation needed]
The business risk is classified into five different main types[11]
[...] every commercial enterprise is a speculation.
Business Risks
Business Risks
Business risk is the possibility a company will have lower than anticipated profits or experience a loss rather than taking a profit. Business risk is influenced by numerous factors, including sales volume, per-unit price, input costs, competition, the overall economic climate and government regulations.
Influencing factors types in Business Risk
Factors in Business Risk
[...] the stock-market impact of the COVID-19 pandemic is more temporally concentrated and more likely to trigger daily stock-market jumps and high stock-market volatility than Spanish Flu developments did a century earlier.
Types of Business Risks
| International | |
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| National | |
