Q3. What are causes of business risk?
Ans. Causes of business risk are:
- Natural Causes: Human beings have control over natural calamities like flood, earthquake, mining, heavy rains, famine etc. This results in heavy loss of life, property etc.
- Human Causes: It includes unexpected event like honesty, carelessness, stoppage of work due to power failure, strikes, riots etc.
- Economic Causes: It includes uncertainties to demand for goods, price, competition, change in technology, etc. Financial problems like rise in interest rate for borrowing, levy of higher taxes etc.
- Other Causes: These are unforeseen events like political disturbance, mechanical failure such as bursting of boiler etc.