Risk and Uncertainty in Business

These flashcards cover essential vocabulary and concepts related to risk and uncertainty in business, including types of risks and the principles of risk management and contingency planning.

Business Risk

A circumstance or factor that may negatively impact the operations or profitability of a business.

Crisis

A situation where unstable conditions exist, usually unexpected, leading to potential problems for a business.

Financial Risk

Risk involving cash flow problems; for example, needing to pay for raw materials before receiving payment for finished goods.

Production Risk

The risk of losing production due to breakdowns of crucial machinery, preventing timely delivery of products.

Human Resources Risk

Risks associated with industrial actions by employees, such as strikes, that can halt production and affect sales.

Environmental Risk

The potential environmental damage caused by a business's operations, which may invoke actions from pressure groups.

Product Risk

The risk associated with a faulty or dangerous product that could result in a product recall.

Legal Risk

The risk of a product's non-compliance with legal safety standards, necessitating withdrawal and further research.

Quantifiable Risk

Risks that can be measured, such as potential losses from changes in exchange rates.

Unquantifiable Risk

Risks that cannot be measured, including the potential impact on a company's image following a product failure.

Risk Management

The process of understanding and minimizing risks in an organization to ensure efficiency and profitability.

Contingency Plan

A plan for outcomes other than the usual expected scenarios, often used in risk management for unlikely but catastrophic risks.

Crisis Planning

Preparing for unexpected events that can significantly impact business operations, like product contamination or labor issues.

Preventative Actions

Proactive measures taken to minimize risks, such as training staff and implementing robust quality control systems.

Risk Register

A formal record that lists identified risks and their potential impacts on the business.