1.01 Nature of Risk Management - CLASSWORK

What is the definition of 'risk' in a business context?

• The possibility of only loss

• The possibility of only gain

• The possibility of loss or gain

• The certainty of success.

A speculative risk in business can result in a loss, no change, or a ______.

• gain

• loss

• certainty

• failure

What is the primary goal of risk management in the business world?

• To avoid all risks

• To lessen or eliminate the impact of pure risks

• To increase speculative risks

• To ignore business losses.

Risk management helps a business to be ______, not reactive, in facing risk.

• passive

• proactive

• indifferent

• aggressive

What are hazard risks in the context of business?

• Risks that cause financial loss

• Risks that cause injury or harm to people, property, or the environment

• Risks that improve business operations

• Risks that are purely strategic.

Fill in the blank: Cybercrime is considered a ______ risk because it can be very costly to companies.

• financial

• operational

• hazard

• strategic

What are some examples of external financial risks that can impact a company's cash flow?

• Inflation

• Interest rate increases

• Credit downgrades

• All of the above.

When the value of the U.S. dollar increases, businesses that acquire resources from foreign suppliers experience a reduction in expenses. True or False?

• True

• False

Fill in the blank: Changes in foreign _______ rates can benefit or hurt a business.

• A) Exchange

• B) Interest

• C) Inflation

• D) Credit

What are operational risks?

• Risks from natural disasters

• Risks from employee actions and business processes

• Risks from technological advancements

• Risks from market competition