Business Risk - Meaning and its causes

1. BUSINESS RISK -
MEANING
•Business risk refers to
- the possibility of inadequate profits or
- even losses due to uncertainties or unexpected events

2. Causes of Business Risk
1.Natural cause
Its an independent phenomenon
and human beings have no control
over it.
Examples;
Flood, Tsunami,
Earthquake

3. 2.Human causes
• Human causes include such unexpected
events as dishonesty, carelessness,
strikes, negligence etc.

4. 3.Economic Causes
• Economic causes include
* change in demand
* change in price
* technological changes
* competition etc.
Financial problems like
rise in interest rate of
borrowing, levy of higher
taxes also include in the
economic causes

5. 4.Other Causes
• These are unforeseen events like
Mechanical failures
political disturbance
fluctuations in exchange rates which lead to the possibility of business
risk

6. Natural Cause
Decrease in demand
Other cause
EXAMPLE
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