Question

_{risk in school/university: business risk, operation risk and financial risk}

Answer 1

Business Risk refers to the ability of the business to make sufficient sales to cover all the expenses including operating, administrative and general. This means the basic viability of the business is referred by Business risk. Considering the business of college or university the revenue from students, related activities, sales of books and other instruments, grants or donation received can cover all the expenses incurred such as Salaries to teachers and staffs, conducting various kind of activities, maintenance of the institutions etc. Considering high cost of education in current scenario the business risk shall be properly analyzed to plan to secure a position where the business meets all the expenses in its way of growth.

The Financial Risk refers to the company's use of financial leverage and debt financing; that includes the ability to generate cash to repay the interest and principal component of financing used. As far as the Schools or university considered which requires huge investment in infrastructure including tangible and intangible, debt financing is unavoidable and therefore it is subject to Financial risk.There should be a plan to repay the amount in proper intervals as stipulated and the cashflow shall be generated and anticipated in that way.

Operational risk is the risk of generating a loss due to various reasons including inadequate or failed procedures, employee errors etc. This focus on the profit which is one of the motive of the business and there should be adequate planning to generate an amount of revenue in excess of the expenses. The School or university shall also focus on generating such a profit in order to find source to finance the future plans and other activities etc..