Business risk

Business risk :-

Risk id fact in business. The property, jobs, health and life of are at risk due to one or other reasons. The future of business is uncertain. There is no surety that business can earn profit at regular rate. The income of a firm may decrease over time due to decline in demand for its products or increase in production cost. The business faces speculative as well as pure risk. The speculative risk may provide favorable or unfavorable results. Every action of a businessmen end with gain or loss. Foe example advertising is a speculative risk. There is profit when sales volume increases as a result of advertisement. There is loss if sales volume remains the same. The speculative risks are accepted as a part of business. Many businesses fail due to competition and people are ready to bear such loss. The possibility of gain or loss goes side by side. The large risks carry large profits and losses. Drilling for oil has a risk but when it is assumed there may be high profit for a company due to successful working. When speculative risks always bring unfavorable results. The dishonesty of employees, loss by fire, property damage, and death of key manager are examples of pure risks. The risks of loss can be prevented, reduced, assumed or shifted to others. No all but some losses can be covered through insurance policies. Anyhow losses are inevitable in the business world.