The Risk Associated with Business: a Review of Literature
GHANA INSTITUTE OF MANAGEMENT AND PUBLIC ADMINISTRATION (GIMPA).
MASTERS IN BUSINESS ADMINISTRATION (MBA), SEPT. 2011.
BUSINESS ENVIRONMENT: Political Environment
GROUP (B) Class
LECTURER: JOSEPH DARMOE, PHD DATE: 21-DEC-2012 STUDENT: FELIX MAWUSI KUWORNU MBAE 11050219
TOPIC
THE RISK ASSOCIATED WITH BUSINESS: A REVIEW OF LITERATURE
LITERATURE REVIEW
Being an entrepreneur and operating a business involves accepting risk. Business Owners are exposed to two primary kinds of risks: Financial risk and Business risk (Oscar Guzman).
Financial risk, as defined by chron.com is the chance that a business does not generate enough revenue to pay creditors and meet other financial obligations, depends on the amount of debt the business owes. Business risk is independent of a company’s’ debt level and relates to the business operations themselves. Oscar Guzman further points out that business risk negatively impacts value. Thus, for two otherwise identical businesses, one with a higher level of risk will always be worth less than one with less exposure. Managing risk therefore becomes paramount to maximising your business value. Guzman iterates the fact that business must continually evaluate it exposure, identify it sources and develop strategies for minimising that exposure. Although there is little small business owners can do to decrease their exposure to the market and sector-wide systematic risks, these risk are widely studied and there are plenty of resources available to entrepreneur that can help predict downturns and other regularly occurring events.
Risk is defined many different ways depending on the discipline being queried for it meaning. On a general level, risk is defined as the probability of variance in an expected outcome (Spekman and Davis
MASTERS IN BUSINESS ADMINISTRATION (MBA), SEPT. 2011.
BUSINESS ENVIRONMENT: Political Environment
GROUP (B) Class
LECTURER: JOSEPH DARMOE, PHD DATE: 21-DEC-2012 STUDENT: FELIX MAWUSI KUWORNU MBAE 11050219
TOPIC
THE RISK ASSOCIATED WITH BUSINESS: A REVIEW OF LITERATURE
LITERATURE REVIEW
Being an entrepreneur and operating a business involves accepting risk. Business Owners are exposed to two primary kinds of risks: Financial risk and Business risk (Oscar Guzman).
Financial risk, as defined by chron.com is the chance that a business does not generate enough revenue to pay creditors and meet other financial obligations, depends on the amount of debt the business owes. Business risk is independent of a company’s’ debt level and relates to the business operations themselves. Oscar Guzman further points out that business risk negatively impacts value. Thus, for two otherwise identical businesses, one with a higher level of risk will always be worth less than one with less exposure. Managing risk therefore becomes paramount to maximising your business value. Guzman iterates the fact that business must continually evaluate it exposure, identify it sources and develop strategies for minimising that exposure. Although there is little small business owners can do to decrease their exposure to the market and sector-wide systematic risks, these risk are widely studied and there are plenty of resources available to entrepreneur that can help predict downturns and other regularly occurring events.
Risk is defined many different ways depending on the discipline being queried for it meaning. On a general level, risk is defined as the probability of variance in an expected outcome (Spekman and Davis