BS2- Risk And Uncertainty

Question 1

Define a business risk

Answer 1

The chance or possibility of an adverse occurrence

Question 2

List three possible risks faced by new businesses

Answer 2

Competition
Customer loyalty’s
High start up costs

Question 3

What is calculated risk?

Answer 3

A calculated risk is a carefully considered decision that exposes a person to a degree of personal and financial risk that is counterbalanced by a reasonable possibility of benefit.

Question 4

Identify 3 non-financial rewards

Answer 4

Customer satisfaction
Flexible working for employees
Giving personal working time

Question 5

List 3 ways a business may respond to a risk

Answer 5

They may go into survival mode
They may have to cut staff to reduce staff
Try and respond with a new inivitve product to increase sales

Question 6

List and explain 3 ways a business can manage risk

Answer 6

Have on going market research
Have a clear understanding of how ones departments actions impact upon another’s
For see and expect change in trends and culture

Question 7

What is quantifiable risk?

Answer 7

The likelihood of a predictable risk occurring. It is possible to put a value on this sort of risk.

Question 8

What is an unquantifiable risk?

Answer 8

The risk of an event that is unexpected. Sometimes referred to as ‘the unknown of unknowns’ it is not possible to put a value on this sort of risk.

Question 9

What is uncertainty?

Answer 9

The inability to calculate the costs and benefits of a decision precisely

Question 10

List 3 external uncertainties

Answer 10

National/ global crisis e.g COVID, earthquake
Change in public trends
Crash in the market

Question 11

List 3 internal uncertainty

Answer 11

Employees leaving
Business going bankrupt
Lack of employe motivation