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Question

Explain the following features of business risk.

(a) Business risks arise due to uncertainties

(b) Risk is an essential part of every business

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Solution

(a) Business risks arise due to uncertainties : A business can't have any control over future happenings due to uncertainty about future. Change in demand and change in government policy are sexamples of uncertainty which create risks for business.

(b) Risk is an essential part of every business : Every business is subject to one or the other kind of risk. No business can avoid risk. Though risk can be minimized, it can't eliminated.


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