Notes

Write a note in this area. It'(b) Varying degree- The extent of risk that a business faces depends upon the nature or type of goods produced and the scale of operation.
A business that produces goods of daily use, such as soap and toothpaste, faces a lower business risk than a business that produces goods that are highly dependent on consumer preferences, such as cell phones.
Similarly, a business operating on a large scale (i.e., a large business firm) faces a higher business risk compared to a small-scale business.

(c) Directly related to profit- We know that profit is the reward for undertaking business risk.
The higher the degree of risk involved, the higher would be the amount of profit earned and vice versa.

(d) Results due to unforeseen circumstances: Risks emerge because of unforeseen circumstances and uncertainties. Unforeseen circumstances may include strikes and thefts (termed ‘human uncertainties’) or business uncertainties—such as price change, changes in government policies and natural disasters, such as earthquakes and floods.
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