Question

what is Enterprise risk?

List, Explain & two Examples

Answer 1

Enterprise risk is any potential danger, threat or disaster which hinders the operations, growth, profit and hampers enterprise from achieiving its objectives and fulfilling its goals. It can be because of both internal and external factors.

Two Enterprise Risk:

1) Talented and Efficient Human Capital

Human Capital day-by-day is reducing and is getting difficult to find. The ever increasing rate of human capital is a matter of concern for companies nowadays as the Human Capital is in high demand of different employment opportunities and degrading quality of education system. Enterprises work on innovation, they need to be moving forward and to move forward , they need innovation, for innovation they need talented human capital , for talented human capital, they need huge prices to pay as the demand is high and according to the golden rule of economics, when the demand is high, the prices go up. When enterprises are investing too much in human capital, they are reducing their profit which is one of the primary objective of an enterprise.

2 ) Recycling and Go Green Initiative

Although it is beneficial for the world and population, it still remains one of the top enterprise risk for those enterprise who are not abiding by the laws and are not able to improve their operations to contribute to the "Go Green Initiative". This is an enterprise risk as these kind of firms are on verge of shutting down by government. Even those who are abiding by the laws and are in regulated limits are investing a lot to be in the limit, any new innovation takes huge cost to ensure that it is the regulatory limits, and these investment are reducing the profit and are placing extra burden on enterprise.