1.06 Business Risk

Front

People who go into business know that the business may not succeed. This possibility is referred to as business

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risk

Front

The general classifications of business risks are

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hazard, operational, strategic, and financial.

Front

A hurricane that destroys a business is an example of a(n) __________ risk.

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hazard

Front

A garden store customer tripped over a plant, fell, and sued the store for damages. This is an example of a(n) __________ risk.

Back

hazard

Front

A union strike that stops production at a manufacturing plant is a(n) __________ risk.

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operational

Front

What category of business risk includes production problems and incompetent employees?

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Operational

Front

When a rival’s product on the market reduces sales of your company’s product, your company is experiencing strategic risk caused by

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competition.

Front

Financial loss from investing time and money to comply with accounting standards is an example of which strategic risk?

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Regulatory and political issues

Front

Which of the following is a pure business risk: Robbery, Obsolescence, Competition, Inflation

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Robbery

Front

Which of the following is an example of a business risk that cannot be covered by insurance: Increase in interest rates, Goods lost in transit, Destruction of building by fire, Injury of employee on the job

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Increase in interest rates