Question

what is business risk ? state the causes of business risk. ​

Answer 1

ANSWER

:-BUSINESS RISK:-

The term 'business risk' refers to the possibility of inadequate profit or even losses due to uncertainties or demand for a particular product may decline due to change in tastes and preferences of consumers or due to increased competition from other producer. Decrease in demand will result in lesser sales and thereby lesser profits.

CLAUSES OF BUSINESS RISK

Business risk arise due to a variety of causes ,which are classified as follows :-

1) NATURAL CAUSES : Human beings have little control over natural calamities like floods, earthquake, heavy rains etc. These natural calamities result in heavy losses of life, property and income in business.

2) HUMAN CAUSES :Human causes include such unexpected events as dishonesty, carelessness, riots, management inefficiency etc.

3) ECONOMIC CAUSES: These include uncertainties relating to demand for goods, competition, price, collection of dues from customers , change of technology of method of production etc.

4) OTHER CAUSES: These are unforeseen events such as political disturbance, mechanical failures such as bursting of boiler etc. which lead to the possibility of business risks.

Answer 2

it is chance or probability that a person will be harmed in his business