What is a business risk? What is its nature?

The term ‘business risks’ refers to the possibility of inadequate profits or even losses due to uncertainties or unexpected events. For example, demand for a particular product may decline due to change in tastes and preferences of consumers or due to increased competition from other producers.

Nature of business risks are:

(i) Business risks arise due to uncertainties:

(ii) Risk is an essential part of every business:

(iii) Degree of risk depends mainly upon the nature and size of business:

(iv) Profit is the reward for risk-taking.