Jonnabel T. Sulasco Feb.

10, 2023
BSIA 3-A

Discuss each type of business risks based on business leaders' perspective.

1. Financial risk - is the increased variability of equity owners' net cash flows as a
result of the fixed financial obligations that come with debt financing and cash
leasing. The risk of cash insufficiency is included in financial risk.

2. Compliance risk - refers to the probability of losses incurred as a result of the

organization and its workers failing to comply with the requirements of legislation,
and legal acts of the authorized body. This might result in the financial institution
losing its reputation, restricting development options and expansion for the
business, fulfilling the terms of contracts / contracts, and even the business being
liquidated.

3. Cybersecurity Risk - involves the risk of a network data breach as well as the risk
of the entire firm being undermined by commercial activities that rely on open
digital connection and accessibility. Specific cyber risks include ransomware,
phishing, malware, third-party risks, internal risks, compliance failures, and other
cyber hazards.

4. Operational risk - the business risk of loss caused by insufficient or failed internal
processes, people, systems, or external events. Examples of operational hazards
include fraud, accounting errors, equipment failure or theft, mis-selling, product
faults, and lawsuits for unfair dismissal.

5. Reputational Risk - The damage that might occur to a business when it fails to
satisfy the expectations of its stakeholders and is consequently negatively
perceived. It is a threat or hazard to a business's or entity's good name or status,
and it can harm any business, regardless of size or industry.

Do you believe that any of these risks tends to repeat during the business cycle?
Explain.
 All of the risks discussed above has the tendency to occur again. As long as the
business still operates, it will have the chance to face all of these risks. You
cannot eliminate these risks totally, what you can do is to be familiar with these
risks so that you will have an idea on how to mitigate them.

To achieve financial goals, entrepreneurs must reconcile what they want with
what they are willing to risk. Comment on this.
 An entrepreneur is an individual who creates and grows a business through their
creative ideas. Although they need money to start business, it is not the primary
motivation for them. Most of the time, they are the one who take huge risks when
starting a business because of their passion. So, I think entrepreneurs will
reconcile what they want with what they are willing to risk in order to see their
dream business take off.