BUSINESS RISK
MARKETING CO-OP
YOU WILL BE ABLE TO….
• Identify the 3 types of business risk
• Explain how risk affects business decisions
• Identify ways that businesses can protect
themselves from risk
BUSINESS RISK
• Risk if the uncertainty of an outcome
• Three types of risk for businesses:
–Economic
–Natural
–Human
ECONOMIC RISKS
• The risk that an endeavor
will be economically
unsustainable
• Can include:
– Changes in
demographics
– Business cycle
– Competition
– Government
regulations
NATURAL 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
HUMAN 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
IMPACT ON PROFITS
• 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
HOW CAN BUSINESSES
PROTECT THEMSELVES?
• 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
REVIEW
• What are the types of business risks?
• What are examples of each?
• How can companies prevent each type of risk?
BUSINESS RISK
ASSIGNMENT
1. Complete Business Risk worksheet
2. Complete Business Risk Case Study assignment
3. Present case study findings next class.