1. Risk Management

2. The possibility of financial loss is risk.
The systematic process of managing exposure to risk is risk management.
There are three types of business risks—
economic
natural
and human

3. Various examples of economic risks include:
amount and type of competition
changing consumer lifestyles
population changes
limited usefulness or style of some products
product obsolescence
government regulation
inflation
recession

4. Various types of natural risks are:
floods
tornadoes
hurricanes
fires
lightning
droughts
earthquakes
unexpected changes in normal weather conditions

5. Various types of human risks are:
human mistakes
unpredictability of customers, employees, and the work environment (what does this mean?)

6. Handling Business Risks
There are four basic ways that businesses can handle risks:
risk prevention and control
risk transfer
risk retention
risk avoidance

7. Risk prevention and control
Screen and train employees
Provide safe conditions and instruction
Prevent external theft
Control employee theft

8. Risk Transfer Purchase insurance
Property insurance…what does that cover??
Covers the loss of or damage to buildings, equipment, machinery, merchandise, furniture, and fixtures
Extended coverage….. what does that cover??
An addition to the policy to add things not typically covered (water/sewer/theft)
Business liability ….. what does that cover??
Protects a business against liability from claims such as personal injury or damage to others property
Personal liability….. what does that cover??
Protects individuals against liability from claims of injury as a result of their actions
Product liability…. what does that cover??
Protects against liability from claims of injury or damage to property caused by products manufactured or sold by a company

9. Fidelity bonds protect a business from employee dishonesty
Fidelity bonds protect a business from employee dishonesty. This is where the term “bonded” originates.
Performance bonds (also called surety bonds) insure against losses that might occur when work or a contract is not finished on time or as agreed.
Life insurance pays money to beneficiaries upon the insured passing.
Credit insurance protects a business from losses on credit extended to customers.
Worker’s compensation is paid by employers to cover employees in case of a job related injury or illness.