question_answer

Meena is running a boutique. She is facing many risks. Her tailor may leave job suddenly which may affect is timely completion of orders. She is also worried about theft or fire in boutique. There are also changes in fashion which may be used as an opportunity or can act as a threat. Government policies can also change like compulsion of GST or maintaining complete accounting records etc. Identify the types of business risks from above para. Give reference to the lines referring those risks.

Answer:

Ans.     Types of business risks are as follows:

(a) Speculative risks: Speculative risks involve possibility of both gain as well as loss. They arise due to fluctuations in demand and supply, changes in price, changes in fashion etc.

(b) Pure Risks: These involve possibility of loss or no loss. Examples chances of fire, accident, theft etc.

(c) Insurable risks: Those risks which can be insured for because it is possible to determine the probability of such risks. Like fire insurance, marine insurance etc.

(d) Uninsurable risks: Uninsurable risks are those whose probability cannot be determined and hence no insurance is available for them. Uninsurable risks are called uncertainty.

Reference:

Uninsurable risk: Her tailor may leave job suddenly which may affect is timely completion of orders.

Government policies can also change like compulsion of GST or maintaining complete accounting records etc.

Pure risks: She is also worried about theft or fire in boutique.

Speculative risks: There are also changes in fashion which may be used as an opportunity or can act as a threat.