Business Risk

Business risk is the exposure a company or organization has to factor(s) that may lower its profits or cause 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, such as changes in consumer taste and demand, the state of the overall economy, and government rules and regulations . 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. 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 by adopting a risk management strategy . Business risks usually occur in one of four ways: strategic risk, compliance risk, operational risk, and reputational risk .

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