HOW TO PROTECT BUSINESS RISKS????

                          PROTECT BUSINESS RISKS????

               MANAGE BUSINESS RISK

 WHAT IS BUSINESS RISK????? 

Risk is the chef characteristic of business. The predominance of this feature in business is because of the continuous business activities in future and the future is indefinite or uncertain. Uncertainty is the mother of risk .nobody can say it with any amount of certainty as to what is going to happen tomorrow. In the context of business some example of risk can be like that –a decline in sales due to the sudden changes in the tastes of the consumers; entry of many competing firm in the market and consequent decline in profits; stopping of production due to the worker’s strike, damage caused by earthquake, thief, etc. in this way, there is a constant possibility of damage or loss in business. The possibility of loss in business is called business risk. It will be wrong to consider loss in business risk is not loss but it’s possibility.

 NATURE OF BUSINESS RISK

It is important to understand the nature of risk in order to study business risk. :

1.      Risk is the result of uncertainties:  Risk is the outcome of uncertainties. Uncertainty can either be man, business or natural.

Ø  Human uncertainty – strike, thief, etc.

Ø  Business uncertainty – wrong assessment of demand, change in price, etc.

Ø  Natural uncertainty- earthquake, drought, snowfall, etc.

2.       Risk is unavoidable: it is difficult to come out of the intriguing web of business risk. The only reason of it is that business is carried on for future and future is uncertain.

3.       Degree of risk varies with the size of business:  the degree of risk is less in small-sized business as compared to the degree of risk in a big business.

How risk is created???

Business risk are created by many human and natural powers. A part from this, there can be many other causes for it. Example, physical causes, economic causes, and government policies, etc. for the convenience of study they can be divided into the following categories:

1.                   Natural cause: these include those cause which are beyond the power of man. Man can only think about them and cannot say anything definitely about them;

   Natural cause

   Seasonal change

  Geological change

  Other natural calamities

2.                   Human cause: man has an important role to play in creating business risk. It includes all the causes born out of human carelessness, thus, checking impatience and lack of intelligence. Thus checking these risks created by man is profitable for the entire society and the country. This risk can be checked with the help of caution, honesty, patience and application of wisdom. Human causes are:

·         Dishonesty by employees

·         Dishonesty by customers

·         Strike and lock-out

·         Working carelessly

·         Economic cause

·         Change in fashion

·         Change in pries

·         Effect of competition

·         Providing facilities to the consumers

·         Technical cause

·         Mechanical cause

·         Managerial cause

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