Question

what are the Business Risks

Answer 1

Business risks is a possible scenario where a company can make lower than anticipated profits or loss rather than making a profit.

Business risks are categorised in 4 ways:

Strategic risk: Strategy risks arises when a particular strategy desined is not generating enough cash flow for the company. This may be due to shifts in consumer preferences, a new technology in market etc. For exapmle, selling products at a low cost is a strategy of walmart.

compliance risk: Compliance risk arises when there is a chance of breaking laws.  This type of risk arises in industries and sectors highly regulated with laws. For example, a wine manufacturer should follow a three tier system. They cannot sell directly to consumer.

Operational risk: When day-to-day operations of company fails to perform, operational risk arises. Operational risks can also result from unforeseen external events such as transportation systems breaking down, or a supplier failing to deliver goods.

reputational risk: Reputational risk is the chance of losses due to a declining reputation as a result of practices or incidents that are perceived as dishonest, disrespectful or incompetent. Any time a company's reputation is ruined, either by one of the previous business risks or by something else, it runs the risk of losing customers based on a lack of brand loyalty.