Lincoln Public Schools - HSOB World of Business - Project 2 Business Risk Lincoln Public Schools - HSOB World of Business - Project 2

Definition Business Risk – the probability of loss or gain inherent in conducting business Types of Risk Competition Shifts in Consumer Demand Obsolescence Government Intervention Business Conditions

Economic Risk Competition Shifts in Consumer Demand Economic risks involved in keeping up with and out performing your competitors Shifts in Consumer Demand Styles that come and go can cause demand to shift i.e., wide vs. narrow ties; flared jeans vs. skinny jeans

Economic Risk Obsolescence Government Intervention Advances in technology, innovation, science, and industry Government Intervention Revenues and profits are affected by what governments require

Economic Risk Business Conditions The environment where a business operates can affect it positively or negatively How markets fare Internal business conditions are also important Choice of business location

Natural Risk Weather Related Perishability Floods, tornadoes, fires, lightning, blizzards, and earthquakes Perishability Fresh produce and other perishable goods will eventually rot or spoil – some faster than others

Human Risk Caused by human weakness and the unpredictability of employees/customers Most common types Dishonesty Carelessness Incompetence

Pure vs. Speculative Risk Pure risks bring the possibility of loss or no loss A tornado may or may not strike your building Speculative risks bring the possibility of loss, no change, or gain Operating a business results in earning money, breaking even, or going bankrupt Buying shares on the stock market is also speculative risk