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

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

3. 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

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

5. 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

6. 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

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

8. 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