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. 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 take to protect your business.
Chapter 12

3. Vocabulary risk risk management risk assessment shoplifting
bounced check
Chapter 12

4. 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
Chapter 12

5. 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
Chapter 12

6. Preparing to Face Risks
When dealing with risk, choices you have include
avoid the risk
assume the risk
transfer the risk
Chapter 12

7. 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
Chapter 12

8. Develop a recovery plan.
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
Develop a recovery plan.
Chapter 12

9. Communicate Your Plan communicate plans to personnel
delegate responsibilities
Chapter 12

10. What should you do to prepare for business risks?
Chapter 1

11. Types of Theft shoplifting
the act of knowingly taking items from a business without paying
Consumers shoplift millions of dollars in merchandise annually.
Chapter 12

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.
Chapter 12

13. Robbery Credit Card Fraud Most businesses are vulnerable to robberies.
dead-bolt locks
burglar alarms
surveillance cameras
Credit Card Fraud
electronic credit authorizer
Chapter 12

14. Bounced Checks bounced check prevention options
a check returned to a business by the bank because the check writer’s checking account had insufficient funds to cover the check amount
prevention options
accept only in-state checks
charge customers a fee for bounced checks
ask for identification
refuse to accept checks
Chapter 12

15. How can you protect your business from theft?
Chapter 1

16. Lesson 12.2 Insure Against Risks
Goals
Identify 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 purchase.
Chapter 12

17. Vocabulary premium pure risk speculative risk controllable risk
uncontrollable risk
insurable risk
Chapter 12

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
Chapter 12

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
Chapter 12

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
Chapter 12

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
Chapter 12

22. What is the difference between a pure risk and a speculative risk?
Chapter 1

23. Uninsurable Risks Economic Conditions changes in competition
population shifts
inflation or recession
government regulations
world events
Chapter 12

24. Consumer Demand Competitors’ Actions Technology Changes Local Factors
Business Operations
Chapter 12

25. Why are some risks uninsurable?
Chapter 1

26. Types of Insurance Business Insurance Life Insurance
business owner’s policy (BOP)
Property insurance
Business interruption insurance
Liability protection
Life Insurance
Other Kinds of Insurance
Chapter 12

27. What types of insurance can you purchase for your business?
Chapter 1

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 property and debts
Agents receive commissions based on the value of policies they sell.
Be sure you actually need all of the insurance your agent recommends by talking to other business owners.
Chapter 12

29. How can you determine how much insurance you need?
Chapter 1

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.
Chapter 12

31. Vocabulary trade credit consumer credit
Federal Employees’ Compensation Act (FECA)
exchange rate
Chapter 12

32. Risks of Credit Debtor-creditor relationships can be voluntary
when a business extends credit to customers
involuntary
when the delivery driver of a small business is at fault in a traffic accident
the business may be required to provide compensation to the injured person
Chapter 12

33. 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
Chapter 1

34. loans credit cards secured loans unsecured loans
installment loans
unsecured loans
credit cards
the credit card company pays for the amount of the purchase
the business pays a fee to the credit card company
the credit card company is responsible for collecting the money from the customer
Chapter 12

35. Credit Policies
Credit policies need to be established to help reduce risks.
A customer’s creditworthiness needs to be established prior to being granted a credit card.
Chapter 12

36. 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
Chapter 12

37. Uncollectible Accounts
an expense to the business
decrease net income
Chapter 12

38. How can a business owner reduce the risks of offering credit?
Chapter 1

39. Risks on the Job Many workplaces have risks.
Any harm suffered by employees at the workplace is considered to be a work-related injury.
Chapter 1

40. Federal Employees’ Compensation Act (FECA)
a law that provides benefits to employees who have suffered work-related injuries or occupational diseases
payment of medical expenses and compensation for lost wages
benefits to dependents of employees who die from a work-related injury or disease
Chapter 12

41. Worker’s Compensation
Worker’s compensation usually provides coverage for:
medical bills
a percentage of lost wages
vocational retraining
death benefits for survivors
Chapter 12

42. Coverage provided by workers’ compensation includes:
medical expenses for on the job injuries
a percentage of lost wages
if an employee is left permanently disabled, either
lump-sum payment or
long-term benefits
Chapter 12

43. 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
Chapter 12

44. Filing a Claim The injured employee must notify the employer.
The employee must follow doctor’s orders.
The employee must file the claim.
Chapter 12

45. What is the purpose of workers’ compensation insurance?
Chapter 1

46. Risks in International Business
differences in language
legal and cultural differences
Product modifications might be required to meet the needs of global trade.
Chapter 12

47. different currency systems
exchange rate
the amount of one country’s currency that can be traded for one unit of currency in another country
travel and shipping expenses may be high
Chapter 12

48. Strategies for Dealing With International Markets
Seek government assistance to answer your questions about international business.
Conduct business in multiple countries.
Work with local business partners.
Chapter 12

49. Comply with international labor standards.
Employ local management.
Learn about the other country’s culture.
Chapter 12

50. What are some of the challenges of competing internationally?
Chapter 1

51. PERFORMANCE INDICATORS
Describe legal issues affecting businesses
Describe the nature of legally binding contracts
Chapter 12

52. Demonstrate responsible behavior
Demonstrate honesty and integrity
Explain business ethics in product/service management
Chapter 12

53. 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?
Chapter 12