1. 12.1 Business Risks 12.2 Insure Against Risks 12.3 Other Risks
Risk Management
12.1 Business Risks
12.2 Insure Against Risks
12.3 Other Risks

2. Ideas in Action Growth is Risky
Scott Alterman has been involved with the development and growth of three companies.
As growth occurred, Scott faced a variety of business risks including:
a loan for a new building
an expanded line of credit
extending credit to high risk customers
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3. Goals List and explain steps involved in preparing to face risks.
Lesson 12.1 Business Risks
Goals
List and explain steps involved in preparing to face risks.
Discuss types of theft and security precautions to protect your business from each type.
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4. Terms risk risk management risk assessment shoplifting bounced check
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5. Dealing with Business Risks
the possibility of some type of loss
risk management
taking action to prevent or reduce the possibility of loss to your business
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6. Identifying Risks human risks natural risks economic risks
caused by the actions of individuals
natural risks
caused by acts of nature
economic risks
occur because of changes in business conditions
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7. Preparing to Face Risks
Determine What Can Go Wrong
risk assessment
looking at all aspects of your business and determining the risks you face
Develop a Plan
chain of command information
the names of individuals who assess risk
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8. preferred method for reporting emergencies
specific instructions for how to shut down equipment prior to evacuation
facility evacuation procedures
specific training for emergency response personnel
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9. Communicate Your Plan Get Back to Business
communicate plans to personnel
delegate responsibilities
Get Back to Business
recovery plan
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10. What should you do to prepare for business risks?
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11. Types of Theft shoplifting
the act of knowingly taking items from a business without paying
Consumers shoplift millions of dollars in merchandise annually.
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12. Employee Theft To deter theft, take the following precautions:
Do not hire dishonest employees.
Install surveillance systems.
Establish a tough company policy regarding theft.
Be on the lookout.
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13. Robbery Credit Card Fraud Robbery is a business risk.
dead-bolt locks
burglar alarms
surveillance cameras
Credit Card Fraud
electronic credit authorizer
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14. Bounced Checks bounced check prevention options
a check returned to you by the bank because the customer’s account had insufficient funds to cover the check amount
prevention options
only in-state checks
customer fees for bounced checks
ask for identification
refuse to accept checks
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15. How can you protect your business from theft?
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16. Lesson 12.2 Insure Against Risks
Goals
Classify risks faced by business owners.
Explain why some business risks are uninsurable.
Determine the different types of insurance you need for your business.
Explain how to approach an insurance business.
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17. Terms premium pure risk speculative risk controllable risk
uncontrollable risk
insurable risk
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18. Classification of Risk
premium
a payment made to an insurance company to cover the cost of insurance
the price paid to cover a specified risk for a specific period of time
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19. Result of the Risk pure risk speculative risk
the chance of loss but no opportunity for gain
speculative risk
the chance to gain or lose from the event or activity
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20. Controllability of the Risk
controllable risk
a risk that can be reduced or avoided by actions you take
uncontrollable risk
a risk on which actions have no effect
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21. Insurability of the Risk
insurable risk
a pure risk faced by a large number of people
the amount of the loss is predictable
uninsurable risk
when there is a risk of loss
the amount of loss cannot be predicted
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22. What is the difference between a pure risk and a speculative risk?
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23. Uninsurable Risks Economic Conditions changes in competition
population shifts
inflation or recession
government regulations
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24. Consumer Demand Competitors’ Actions Technology Changes Local Factors
Businesses need to accurately predict consumer demand.
providing enough product to meet demand
avoiding excess inventory
Competitors’ Actions
Technology Changes
Local Factors
Business Operations
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25. Why are some risks uninsurable?
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26. Types of Insurance Business Insurance Life Insurance
Business Owner’s Policy
Property Insurance
Business Interruption Insurance
Liability Protection
Life Insurance
Other Kinds of Insurance
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27. What types of insurance can you purchase for your business?
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28. Buy Insurance Choose an Insurance Agent
compare prices and policies
choose an agent you trust
Determine How Much Coverage You Need
obtain sufficient insurance to cover loans
Agents receive commissions based on the value of policies they sell.
Be sure you actually need all of the insurance your agent recommends.
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29. How can you determine how much insurance you need?
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30. Goals Identify risks associated with credit.
Lesson 12.3 Other Risks
Goals
Identify risks associated with credit.
Explain how to manage risks at work.
Describe strategies to reduce the risks of doing business internationally.
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31. Terms trade credit consumer credit
Federal Employees’ Compensation Act (FECA)
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32. Risks of Credit Types of Credit trade credit consumer credit
when one business allows another business to buy now and pay later
often a higher price than the cash price
consumer credit
when a retail business allows its customers to buy merchandise now and pay for it later
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33. loans credit cards secured loans installment loans unsecured loans
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34. Credit Policies
Factors to consider when determining whether a customer is creditworthy include:
Previous credit history
Employment record
Assets owned
Money available for making payments
Financial references
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35. Uncollectible Accounts
an expense to the business
decreases net income
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36. How can a business owner reduce the risks of offering credit?
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37. Risks at Work Federal Employees’ Compensation Act (FECA)
a law that provides benefits to employees who have suffered work-related injuries or occupational diseases
including benefits to dependents of an employee who dies from a work-related injury or disease
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38. Worker’s Compensation
Worker’s compensation usually provides coverage for:
medical bills
a percentage of lost wages
vocational retraining
death benefits for survivors
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39. Generally, the following injuries are not covered by workers’ compensation:
self-inflicted
suffered while under the influence of alcohol or illegal drugs
suffered during a fight that the injured employee started
suffered while disobeying orders
suffered while committing a crime
suffered while not on the job
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40. Filing a Claim The injured employee must notify the employer.
The employee must follow doctor’s orders.
The employee must file the claim.
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41. What is the purpose of workers’ compensation insurance?
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42. Risks in International Business
collection of payments
currency of payments
differences in language
legal and cultural differences
product modifications might be required to meet needs of the new market
high travel and shipping expenses
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43. Strategies for Dealing With Global Risks
Seek government assistance to answer your questions about international business.
Conduct business in multiple countries.
Work with local business partners.
Employ local management.
Learn about the other country’s culture.
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44. What are some of the challenges of competing internationally?
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45. PERFORMANCE INDICATORS EVALUATED
Describe legal issues affecting businesses.
Describe the nature of legally binding contracts.
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46. Demonstrate responsible behavior.
Demonstrate honesty and integrity.
Explain business ethics in product/service management.
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47. THINK CRITICALLY What is the conflict of interest in this case?
Why should Beautiful Spaces pay the city of Lincoln?
What compromise could the city propose to reduce the fines?
How can the city avoid this situation in the future?
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