Business Risk
Jul 08, 2021
Business risk implies uncertainty in profits or danger of losses on account of
internal and external decision and events. The risk is inherent in every area of
business activity and varies according to the nature and size of business. Some
examples of risk are an irregular supply of raw materials breakdown of
machinery, price fluctuations, errors in sales forecasting, trade cycles, natural
and manmade disturbances etc.
Risks are inevitable and cannot be eliminated but only controlled through
proper preventive and corrective measures of risk management. First, it is
important to sort the risks faced in business to know them better.
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Most companies adopt a risk management strategy. This can be done either before the business begins operations or after it experiences a setback. Ideally, a risk management strategy will help the company be better prepared to deal with risks as they present themselves. The plan should have tested ideas and procedures in place in the event that risk presents itself.
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