Professional Documents
Culture Documents
Businessrisks 101011205120 Phpapp02
Businessrisks 101011205120 Phpapp02
Risk
The possibility of a financial loss.
Risk management
The process of managing a businesss exposure to risk in order to achieve business objectives.
Business risk
Types of Risks
Speculative risk
Risking loss to make a profit. Possibility of seeing a loss, no change, or actually making profit Examples include
buying new machinery constructing new buildings
Pure risk
The possibility of loss to a business without any possibility of gain
Economic risks Natural risks Human risks
Economic Risks
Risks that result from changes in overall business conditions. Examples of economic risks include:
Competition More businesses that would compete with your business open in the area. Changing consumer lifestyles The lifestyle of the consumers in your area changes due to new industry opening or closing, new businesses, etc. Population changes Potential customers
moving out due to economic downfall
Limited usefulness of products - new products introduce replace your products or the needs of customers needs change Inflation the availability of cash to customers will reflect in the buying patterns. Product obsolescence products you offer to the public is not longer needed or out-of-date.
Government regulation new regulations can change the status of your products. Products can be recalled because of safety measures such as baby products or medicines. Recession Just as with inflation the availability of cash affect customer purchases.
Natural Risks
Risks resulting from natural causes. Examples include:
Floods Earthquakes Tornadoes Hurricanes Fires Lightening Droughts Unexpected changes in normal weather conditions
Human Risks
Risks caused by human errors as well as the unpredictability of customers, employees, or the work environment. Shoplifting Employee theft Burglary Robbery Computer crime Stolen credit cards and bad checks Accidents and injury
Design work areas to reduce the chance of accident or fire. Educate employees on safe use of equipment. Check and service safety equipment on a regular basis. Stress the limits of your companys products.
Provide customers with instructions on the proper and safe use of products, as well as warnings about possible hazards.
Shoplifting is a form of external theft that involves taking items from a business without paying for them. Ways to reduce shoplifting.
Educate employees on shoplifting prevention guidelines. Provide effective store layouts with adequate lighting and orderly displays. Store expensive items in locked display cases or tag expensive merchandise with electronic devices. Employ the use of two-way mirrors, security personnel, or closed circuit television.
Implement ways to reduce robbery. Robbery involves the taking of property by violence or threat.
Limit the amount of money kept on hand.
Use a safe.
Handle bank deposits discreetly. Install surveillance cameras to help identify robbers. Schedule employees so that no one is alone in a business at any time. Hire security guards. Provide adequate lighting inside and outside of the building. Make sure that doors are locked and alarms are set at night.
Businesses is self-insurance against business loss. If a business cannot or does not provide for ways to transfer risk using one of the described means, the business should set aside money each month to help cover the costs should a loss occur. Planning for the unexpected, can save a business.
Emergency Planning
Businesses must:
create emergency response plans to help handle emergency situations more smoothly. have procedures in place before a crisis occurs.