Business Risks

Question 1

State 4 risks a business may face?

Answer 1

Financial, reputational, operational and security.

Question 2

What is a financial credit risk?

Answer 2

The risk of losing credit ratings and ability to borrow as a result of failing to repay a loan or meet contractual obligations.

Question 3

What is a financial liquidity risk?

Answer 3

The risk of being unable to meet short-term financial obligations, such as settling due payments, resulting in overall loss.

Question 4

What is an economical risk to a business?

Answer 4

Fluctuations in interest rates, exchange rates and taxes in the economy, potentially impacting how the business may preform.

Question 5

How does non-compliance pose as a risk to a business?

Answer 5

Non-compliance from workers, such as privacy breaches, environmental and sustainability concerns, corrupt practices and poor employee behaviour and health and safety practices can breach legislative requirements and result in legal repercussions.

Question 6

What are some risk management controls? How are these effective?

Answer 6

Insurance - protects a business from unexpected risks and the insurance company can pay the business to cover and costs, damage or compensation. If a business does not have this then they risk being responsible for all related costs.

Risk register - document identifying potential setbacks within a project, aiming to identify, analysis and resolve any risks before they happen.

Strategic planning - achieves desired longer term future goals for the business, using specific strategies, resources and evaluation processes.