Page 17 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Risk

4.3 Economic risk

Risks that changes in the economy might affect the business.

4.4 Financial risk

Risk of a change in a financial condition such as an exchange rate, interest rate,
credit rating of a customer or price of goods.

 Credit risk Risk of non-payment by customers

 Political risk Risk arising from actions taken by a government that
affect financial aspects of the business

 Currency risk Risk of fluctuations in the exchange rate

 Interest rate risk Risk that interest rates change

 Gearing risk Risk in the way a business is financed (debt v equity)

4.5 Technology risk

Risk that technology changes will occur that either present new opportunities to
businesses, or on the down-side make their existing processes obsolete or
inefficient.

4.6 Environmental risk

Risk that arises from changes in the environment such as climate change or natural
disasters.

4.7 Corporate reputation risk

Reputation risk is for many organisations a down-side risk as the better the
reputation of the business the more risk there is of losing that reputation.

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