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Nature of Business risk (possibilities a company (influenced by (numerous…
Nature of Business risk
possibi
lities a comp
any
low
er th
an
antici
pated p
rofits
or exp
erie
nce
a los
s ra
ther
takin
g pr
ofits.
in
fluenced
by
numero
us fact
ors,
includ
ing s
ales v
olu
me,
pe
r-u
nit p
ri
ce,
inp
ut co
sts,
co
mpetiti
on,
over
all eco
nomic
clim
ate &
govern
ment regul
ations.
1. Arises due to Uncertainties
mea
n w
h
en y
ou
no
t
su
re o
f
wh
at is g
oing
to ha
ppen
i
n fu
tur
e.
Ex
amp
le
chan
ge in de
mand,
go
vernm
ent p
olic
y,
technolo
gy e
tc.
2. Essential part of any Business
a
n impor
tant
chara
cteri
stic
o
f
bu
sine
ss.
N
o b
usine
s
s
avo
id ri
sks
d
egr
ee of
ris
k
m
a
y ve
ry R
isk
r
e
duc
ed b
ut
cann
ot b
e elim
ina
ted
3. Degr
ee of Ri
sk Depen
ds upo
n the Na
ture an
d Siz
e of B
usine
ss
Examples
busi
nes
s inv
olv
ed
fash
ion it
ems
be
ar
s
mor
e ris
k
co
mpar
ed t
o
busin
ess in
volved
s
ta
ndard
ized g
ood
s.
4. Profit is the Reward for bearing the Risk:
busines
s ear
ns
a pr
ofit
be
caus
e
bear
ing ri
sk.
”N
o ri
sk
no g
ain”
lar
ger ri
sk
mo
re
pro
fit.
ent
reprene
ur be
a
rs
ris
k
exp
ecta
tio
ns
e
a
rnin
g a p
rof
it
.