ITB: 2-11 Business Risk Factors

According to the text, what is the economic system that assumes companies are built with a purpose of creating economic value through innovation and driven by a profit-motive?

• Socialism

• Capitalism

• Communism

• Fascism

What are the two categories of risks faced by businesses?

• Pure and Speculative

• Market and Product

• Strategic and Financial

• Management and People

Which type of risk is difficult to predict and often occurs randomly?

• Market Risk

• Product Risk

• Pure Risk

• Speculative Risk

What are some examples of natural disasters mentioned in the text?

• Inflation and recessions

• Poor quality and bad customer reviews

• Manufacturing malfunction and supply chain disruptions

• Tornadoes and earthquakes

Which risk is associated with poor decisions made by managers of the company?

• Market Risk

• Production Risk

• Management Risk

• Financial Risk

What is the process called that identifies and tracks risks, and creates a strategy to prepare for and minimize the impact of certain risks and threats?

• Risk Mitigation

• Risk Transfer

• Risk Analysis

• Risk Sensitivity

Which type of risk can be insured?

• Pure Risk

• Speculative Risk

• Market Risk

• Product Risk

What is a good way for entrepreneurs to mitigate or transfer their own personal risk?

• Purchase insurance

• Use a form of company ownership

• Create a proforma

• Implement enhanced security measures

What is the term used for an estimate/projection of future revenues, expenses, net income, and capital needed to fund a company's operations?

• Risk Analysis

• Sensitivity Analysis

• Proforma

• Market Research

In a sensitivity analysis, what is calculated to see how changes in one variable affect the outcome of the whole?

• Net Income

• Expenses

• Revenue

• Market Share