Explain the meaning and nature of business risk. List the most commonly identified sources of business risk.
What will be an ideal response?
Business risk is the probability that the future state of the business will be less successful than planned, resulting in the loss of value of business assets.
The most commonly identified sources of business risk are:
1. Financial risk that is a result of choosing among sources and types of capital investment.
2. Nonpayment of debts owed to the business.
3. Changes in technology that render the business's product or service obsolete.
4. Injury and illnesses suffered by employees as a result of their employment.
5. Injury from accidents incurred by customers, vendors, and others while on business property.
6. Loss or harm incurred because of the use of the business's product or service.
7. Natural events, such as storms, floods, fire, and earthquakes.
8. Violation of any of the multitude of laws and regulations that apply to small business.
9. Theft of business property.
10. Misbehavior by employees.
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