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Business Risk

(@Anonymous)
New Member

Hi

Business risks are of a diverse nature and arise due to innumerable factors. These risks may be broadly classified into two types, depending upon their place of origin.

* Internal Risks are those risks which arise from the events taking place within the business enterprise. Such risks arise during the ordinary course of a business. These risks can be forecasted and the probability of their occurrence can be determined. Hence, they can be controlled by the entrepreneur to an appreciable extent.

The various internal factors giving rise to such risks are:-

Human factors:- are an important cause of internal risks.They may result from strikes and lock-outs by trade unions; negligence and dishonesty of an employee; accidents or deaths in the industry;incompetence of the manager or other important people in the organisation,etc. Also, failure of suppliers to supply the materials or goods on time or default in payment by debtors may adversely affect the business enterprise.
Technological factors:- are the unforeseen changes in the techniques of production or distribution.They may result in technological obsolescence and other business risks. For example, if there is some technological advancement which results in products of higher quality, then a firm which is using the traditional technique of production might face the risk of losing the market for its inferior quality product.

Keep sharing and reading

thanks

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Topic starter Posted : 15/02/2010 6:56 am
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