what is internal and external causes of business risk?
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Internal Risk Factors. Internal risksare faced by a company from within its organization and arise during the normal operations of the company. These risks can be forecasted with some reliability, and therefore, a company has a good chance of reducing internal business risk
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External risks come up due to economic events that arise from outside the corporate structure. External events that lead to external risk cannot be controlled by any one company or cannot be forecasted with a high-level of reliability. Therefore, it is hard to reduce the associated risks.
Internal Risk Factors
Internal risks are faced by a company from within its organization and arise during the normal operations of the company. These risks can be forecasted with some reliability, and therefore, a company has a good chance of reducing internal business risk.
The three types of internal risk factors are human factors, technological factors and physical factors.
1. Human-factor risk can include:
Union strikes
Dishonesty by employees
Ineffective management or leadership
Failure on the part of external producers or suppliers
Delinquency or outright failure to pay on the part of clients and customers
Personnel issues may pose operational challenges. Staff who become ill or injured and, as a result, are unable to work can decrease production. A company may need to hire or replace personnel key to the company's success. Strikes can force a business to close.
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Internal Risk Factors
Internal risks are faced by a company from within its organization and arise during the normal operations of the company. These risks can be forecasted with some reliability, and therefore, a company has a good chance of reducing internal business risk.
The three types of internal risk factors are human factors, technological factors and physical factors.
1. Human-factor risk can include:
Union strikes
Dishonesty by employees
Ineffective management or leadership
Failure on the part of external producers or suppliers
Delinquency or outright failure to pay on the part of clients and customers
Personnel issues may pose operational challenges. Staff who become ill or injured and, as a result, are unable to work can decrease production. A company may need to hire or replace personnel key to the company's success. Strikes can force a business to close.
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