What are the reason for business risk? 3 marks question

1.	What are the reason for business risk? 3 marks question
Answer» Causes of business risk-\tNatural causes: Human beings have little control over natural calamities like flood, earthquake, lightning, heavy rains, famine etc. These natural calamities result in heavy loss of life, property and income in the business.\tHuman causes: Human causes include such unexpected events as dishonesty, carelessness or negligence of employers, stoppage of work due to power failure, strikes, riots, management inefficiency etc. The employees may hamper the production by going on strikes, riots etc. This can also lead to heavy loss of business condition. There can be price fluctuations in the market, there can be a change in fashion, taste, preferences, and demands of customers\tEconomic causes: Economic causes are related to a chance of loss due to change in the market. There can be a change in the degree of competition. All these have a direct impact on the earnings of the business.\tEven a change in Government policy affects the business a lot. For example, in 1971 when the Janata government came to power the Coca-Cola Company and many other foreign companies were sent back to India.\tOther causes: These are unforeseen events, such as political disturbances, mechanical failures such as the bursting of boiler, fluctuations in exchange rates etc. which lead to the possibility of business risks.

Discussion