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Identify the 3 types of business risk
Explain how risk affects business decisions
Identify ways that businesses can protect themselves from risk
SWBAT
Risk if the uncertainty of an outcome
Three types of risk for businesses: Economic Natural Human
Business Risk
The risk that an endeavor will be economically unsustainable
Can include: Changes in demographics Business cycle Competition Government regulations
Economic Risks
Probability of harm to human health, property or the environment posed by any aspect of the physical world other than human activity
Can include: Perishability Weather Fires
Natural Risks
Risks related to the actions of those inside and outside the company
Can include: Employee theft or incompetence Accidents Shoplifting Fraud Computer-related crime
Human Risks
Economic: Loss of potential consumers Product/Service popularity may end quicker than expected Competition may increase and you could lose customers Increased regulations could prevent certain business practices or production
Natural: Loss of goods = loss of profits Damage of goods/resources
Human: Loss of goods/resources Injuries Lawsuits Loss of information
Impact on Profits
Risk Management The identification, assessment, and
prioritization of risks followed by minimizing and controlling the probability of unfortunate events
How Can Businesses Protect Themselves?
Against Economic Risks: Conducting constant research to stay ahead of the
curve Staying up to date with regulations
Against Natural Risks: Can be more difficult that others Implementing safety measures (sprinklers, fire
extinguishers)
Against Human Risks: Conducting background searches on employees Implementing security measures (cameras,
internet security) Providing safety training for employees
How Can Businesses Protect Themselves?
What are the types of business risks? What are examples of each? How can companies prevent each type of
risk?
Review
Find a company that has had to deal with at least of the types of risk we talked about today
On a PowerPoint, give the following information:
Business Risk Assignment
•What is the company? (Name, What do they do)•What happened to them? (Disaster, Fraud, etc.)•What was the result? (loss of money, etc.)•How did they handle the situation?•Do you think they did the right thing?•How would you have done it differently?