RISK MANAGEMENT

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RISK MANAGEMENT
7.01 Define business risk and the types of risks
businesses encounter.
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Business Risk The possibility of business loss
or failure
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Economic Risks

• Occur from changes in overall business conditions
• Competition
• Changing consumer lifestyles
• Limited usefulness or stylishness of products
• Product obsolescence
• Government regulation
• Inflation or recession

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Natural Risks
Risks resulting from natural causes
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Human Risks
Risks resulting from human mistakes and the
unpredictability of employees or customers
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RISK MANAGEMENT
7.02 Examine strategies businesses use to manage
risks.
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Methods used to handle business risks

• Risk prevention and control
• Screen and train employees
• Provide safe conditions and safety instructions
• Prevent external theft
• Control employee theft

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Methods used to handle business risks

• Risk transfer
• Purchase insurance
• Maintain awareness of the types of insurance
  available
• Guarantees and warranties
• Transfer risks through business ownership

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Methods used to handle business risks

• Risk retention
• When it is impossible for business to prevent or
  transfer risks, they must assume responsibility
  for them.

• Risk avoidance
• Certain risks can be avoided by anticipating them
  in advance.