Question

Business risk has three possible sources. What are they and what makes them important to risk?

Answer 1

The three possible sources of Business risk are as follows-

• Customer Risk - It is related to the key success factors pf the customers for the project. A project will only be successful if the customer is successful with the system.The key success factors are found in both the context or environment within which the system and its users will function  and the customer's requirements
• Technical Risk - This risk is related to the probability of loss incurred through the execution of a technical process in which the outcome is uncertain. Until the system is actually constructed and tested every component of the architecture is a potential source of risk.
• Financial Risk - This risk is related to the company's inability to generate sufficient cash flow to be able to make interest payments on financing or meet other debt-related obligations.It arises due to the company's use of financial leverage and debt financing in a inapprapriate manner.

The three possible sources of Business risk are important to risk as project managers can plan effectively for the risks that may be associated with a project. It will help to maintain and increase the company's performance and profitability.Though a company cannot completely eliminate risk, but it can control or at least successfully manage risk by identifying the possible sources of risk and control effectively.