Risk Management Flashcards
What is an essential part of risk management?
A business plan
What does a business plan cover and who uses it?
- covers goal and objectives
- used by accountants, financial institutions and the business itself
- should be constantly reviewed
What are the benefits of having a business plan?
- forces owner/manager to assess actions and set goals
- can anticipate problems
- shows others the intention of successful operation
What can insurance protect against?
Financial loss
What insurance should a business have?
- home insurance
- contents insurance
What are legal ways to manage risks? (3)
- patents
- copyright laws
- trademarks
How could properly training staff reduce risk?
- staff can cope with changes in market
- adds flexibility
Where can businesses seek advice from? (6)
- accountant
- tax agent
- personal consultant
- office of fair trading
- community colleges
- TAFE
What is the definition of bankrupt?
When a sole trader or partnership is unable to pay its debts.
Must be declared bankrupt by a court
What are creditors?
People or firms that are owed money
What are realised assets?
Assets such as land and motor vehicles that have been sold and converted into cash
Who can apply to the court for bankruptcy?
- sole trader
- one of the creditors
Which order must debts be paid?
- ATO first
- other people second
Can businesses continue once they are declared bankrupt?
Yes, but their business activities are strictly limited.
What is to be liquidated?
To be ‘wound up’
