Business risk
Business risk is the exposure a company or organization has to factor(s) that will lower its profits or lead it to fail. Anything threatening a company's ability to achieve its financial goals is considered a business risk. Many factors can converge to create business risk. Sometimes a company's top leadership or management creates situations where a business may be exposed to a greater degree of risk. However, sometimes the cause of risk is external to a company. Because of this, a company can't shelter itself from risk completely. However, there are ways to mitigate the overall risks associated with operating a business; most companies adopt a risk management strategy. Business risk is any exposure a company or organization has to factor(s) that may lower its profits or cause it to go bankrupt. The sources of business risk are varied but can range from changes in consumer taste and demand to the state of the overall economy and government rules and regulations. While companies may not be able to avoid business risk altogether, they can take steps to mitigate its impact, including developing a strategic risk plan[Investopedia].
Business risk is classified into five primary types: Strategic risk - The risks associated with the operations of that particular industry. These kinds of risks arise from. Business environment: Buyers and sellers interact to buy and sell goods and services, changes in supply and demand, competitive structures, and introduction of new technologies. Transaction: Assets relocation of mergers and acquisitions, spin-offs, alliances, and joint ventures. Investor relations: Strategy for communicating with individuals who have invested in the business. Financial Risk: These are the risks associated with a particular industry's financial structure and transactions. Operational risk: These are the risks associated with a particular industry's operational and administrative procedures. Compliance risk (legal risk): These are risks associated with the need to comply with the rules and regulations of the government.
Other risks: There would be different risks like natural disasters (floods) and others depending upon the nature and scale of the industry[Business Portal of India]
Business Portal of India : Growing a Business : Business Risks. (n.d.). https://web.archive.org/web/20121103033927/http://business.gov.in/growing_business/business_risks.php
What Is Business Risk? Investopedia. Retrieved from: https://www.investopedia.com/terms/b/businessrisk.asp