Standard 2 Indicator 2.05 LAP 003

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

• risk

• downsizing

• retention

• economizing

The general classifications of business risks are

• competitive, strategic, financial, and operational

• production, hazard, operational, and strategic

• hazard, operational, strategic, and financial

• strategic, production, competitive, and hazard

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

• operational

• strategic

• financial

• hazard

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

• strategic

• hazard

• operational

• financial

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

• financial

• strategic

• operational

• hazard

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

• Operational

• Strategic

• Hazard

• Financial

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

• regulatory and political issues

• changing customer needs

• competition

• obsolescence

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

• Reputation damage

• Changing customer needs

• Regulatory and political issues

• Obsolescence

Which of the following is a pure business risk:

• Robbery

• Competition

• Obsolescence

• Inflation

Which of the following is an example of a business risk that cannot be covered by insurance:

• Goods lost in transit

• Increase in interest rates

• Destruction of building by fire

• Injury of employee on the job