Question

No business is risk free in light of this statenent explain the concept of business risk and its causes

Answer 1

Answer:

Explanation:

"No business is risk free". In the light of this statement explain the concept of business risk and its caused. Business risk : The term 'business risk' refer to the possibility of inadequate profits or even losses, due to uncertainties or unexpected events. ... Risk is an essential part of every business.

Answer 2

CAUSES OF BUSINESS RISK

• Nature causes :- Nature is an independent phenomenon and human beings have no control over it. Natural calamities like earthquake, flood, drought, famine, etc affect a business a lot and can result in heavy losses. The national causes are such type of uncertain factors that human beings cannot make any preparation against.
• Human Causes :- Human causes are related to a chance of loss due to human being or employees of the organisation. The dishonesty of employees can bring heavy losses for business e.g., the employees may leak a business secret to a competitor and may commit fraud also.
• Economic causes :- Economic causes are related to a chance of loss due to change in market condition. There can be price fluctuations in the market, there can be changed in fashion, taste, preferences and demands of customers. There can be changed in the degree of competition. All these have a direct impact on the earnings of the business. Even change in government policy affects the business a lot.
• Physical causes :- All the causes which result in damage of acids are considered as physical causes, for example, change in technology may result in machinery being out dated, use of old Technology, mechanical defects may also resulting damage of acids such as posting of boiler, accident to employee etc.