2. YOU WILL BE ABLE TO….
• Identify the 3 types of business risk
• Explain how risk affects business decisions
• Identify ways that businesses can protect
themselves from risk
3. BUSINESS RISK
• Risk if the uncertainty of an outcome
• Three types of risk for businesses:
–Economic
–Natural
–Human
4. ECONOMIC RISKS
• The risk that an
endeavor will be
economically
unsustainable
• Can include:
–Changes in
demographics
–Business cycle
–Competition
–Government
5. NATURAL RISKS
• Probability of harm to human health,
property or the environment posed by any
aspect of the physical world other than
human activity
• Can include:
–Perishability
–Weather
–Fires
6. HUMAN RISKS
• Risks related to the actions
of those inside and outside
the company
• Can include:
–Employee theft or
incompetence
–Accidents
–Shoplifting
–Fraud
–Computer-related crime
7. IMPACT ON PROFITS
• Economic:
– Loss of potential consumers
– Product/Service popularity may end quicker than expected
– Competition may increase and you could lose customers
– Increased regulations could prevent certain business
practices or production
• Natural:
– Loss of goods = loss of profits
– Damage of goods/resources
• Human:
– Loss of goods/resources
– Injuries
– Lawsuits
8. HOW CAN BUSINESSES
PROTECT THEMSELVES?
• Risk Management
– The identification, assessment, and
prioritization of risks followed by
minimizing and controlling the
probability of unfortunate events
9. HOW CAN BUSINESSES
PROTECT THEMSELVES?
• Against Economic Risks:
– Conducting constant research to stay ahead of
the curve
– Staying up to date with regulations
• Against Natural Risks:
– Can be more difficult that others
– Implementing safety measures (sprinklers, fire
extinguishers)
• Against Human Risks:
– Conducting background searches on employees
– Implementing security measures (cameras,
internet security)
– Providing safety training for employees
10. REVIEW
• What are the types of business risks?
• What are examples of each?
• How can companies prevent each type of risk?
11. BUSINESS RISK
ASSIGNMENT
1. Complete Business Risk worksheet
2. Complete Business Risk Case Study
assignment
3. Present case study findings next class.
