what is business risk ?how many types of business risk?
Answers
Answer:
Business risk usually occurs in one of four ways: strategic risk, compliance risk, operational risk, and reputational risk.
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Business risk usually occurs in one of four ways: strategic risk, compliance risk, operational risk, and reputational risk.
1. Economic Risk
The economy is constantly changing as the markets fluctuate. Some positive changes are good for the economy, which lead to booming purchase environments, while negative events can reduce sales. It's important to watch changes and trends to potentially identify and plan for an economic downturn.
2. Compliance Risk
Business owners face an abundance of laws and regulations to comply with. For example, recent data protection and payment processing compliance could impact how you handle certain aspects of your operation. Staying well versed in applicable laws from federal agencies like the Occupational Safety and Health Administration (OSHA) or the Environmental Protection Agency (EPA) as well as state and local agencies can help minimize compliance risks.
3. Security and Fraud Risk
As more customers use online and mobile channels to share personal data, there are also greater opportunities for hacking. News stories about data breaches, identity theft and payment fraud illustrate how this type of risk is growing for businesses.
Not only does this risk impact trust and reputation, but a company is also financially liable for any data breaches or fraud. To achieve effective enterprise risk management, focus on security solutions, fraud detection tools and employee and customer education about how to detect any potential issues.
4. Financial Risk
This business risk may involve credit extended to customers or your own company's debt load. Interest rate fluctuations can also be a threat.
Making adjustments to your business plan will help you avoid harming cash flow or creating an unexpected loss. Keep debt to a minimum and create a plan that will start lowering that debt load as soon as possible. If you rely on all your income from one or two clients, your financial risk could be significant if one or both no longer use your services.
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