Question

explain the nature of business risk with example

Answer 1

a)Business risks arise due to uncertainties
             Uncertainties refers to the lack of knowledge about what is going to happen in the future.For example,natural calamities,change in demand.......etc
b)Degree of risk depends mainly upon the nature and size of business
             Nature of business are the main factors which determine the amount of risk.For eg:a business dealing in fashion able items has a high degree of risk.
c) Profit is the reward for risk taking
          Greater the risk involved in a business higher is the chance of profit.Profit is thus,the reward of risk taking.

Answer 2

NATURE OF BUSINESS RISKS :-

♥ Business risks arise due to uncertainties - Lack of knowledge of what is going to happen in future create uncertainties in business . It may be due to natural calamities , change in demand and prices , strikes etc .

♥ Risk is an essential part of every business - No business can avoid risk although the amount of risk may vary from business to business . Risk can be minimized but cannot be eliminated .

♥ Degree of risk depends mainly upon the nature and size of business - Level of risk is lower for small scale business while it is higher for large scale organization .

♥ Profit is the reward for risk taking - A business gets profit as return for undertaking risk . Greater the risk involved in a business , higher is the chance of profit .