Business risk is the “what if?” factor. It’s the chance that something unexpected might affect a company’s success or goals. Business risks can come from many places – like macro changes in the economy, the arrival of new competitors or even totally unexpected events like a pandemic. Sometimes, businesses take calculated risks by trying out something new to potentially earn more money. But, the more risk there is, the higher the chance of failure. Different types of risks can affect a business differently, such as strategic risks (making the right decisions), operational risks (running the business smoothly), financial risks (managing money), legal risks (following laws) and risks related to disasters. Companies try to understand risks and make plans to handle them, a bit like packing sunscreen and an umbrella for a picnic. In the same way, businesses might diversify their products, have backup plans or save money for tough times.
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