Definition of Business risk:
However, sometimes the cause of risk is external to a company. Because of this, it is impossible for a company to completely shelter itself from risk. However, there are ways to mitigate the overall risks associated with operating a business; most companies accomplish this through adopting a risk management strategy.
Business risk is the exposure a company or organization has to factor(s) that will lower its profits or lead it to fail. Anything that threatens a company's ability to achieve its financial goals is considered a business risk. There are many factors that can converge to create business risk. Sometimes it is a company's top leadership or management that creates situations where a business may be exposed to a greater degree of risk.
The probability of loss inherent in an organizations operations and environment (such as competition and adverse economic conditions) that may impair its ability to provide returns on investment. Business risk plus the financial risk arising from use of debt (borrowed capital and/or trade credit) equal total corporate risk.
How to use Business risk in a sentence?
- While companies may not be able to completely avoid business risk, they can take steps to mitigate its impact, including the development of a strategic risk plan.
- You need to understand what the business risk of any new project is before you decide to fully take it on.
- There is always an inherent business risk assumed by all parties involved that often goes unspoken as the eyes are always on the prize.
- The sources of business risk are varied but can range from changes in consumer taste and demand, the state of the overall economy, and government rules and regulations.
- Business risk is any exposure a company or organization has to factor(s) that may lower its profits or cause it to go bankrupt.
- While we wanted to add a new product to our current line-up, our investors decided it was not worth the business risk .
Meaning of Business risk & Business risk Definition