Page 180 - RISK Management IC 86

Risk Management

risks are mostly insurable whereas speculative risks
are not insurable.

Q3b) Give examples of various uncertainties
associated with the conduct of any business.

Ans. Uncertainties are part of life. No matter how planned a
person might be, all business suffer from uncertainties.
There are several uncertainties associated with the
conducting of business. They are
(i) Production Risks - A firm may fail to produce its
planned output. Production may be disrupted by
fire, flood, strikes etc. Management may
overstretch its technical and financial abilities. The
plant may be proved to be badly planned and fail to
operate efficiently. A change in market conditions
may also affect the availability and cost of raw
materials .
(ii) The Marketing and Distribution Risks - In order
to earn, a firm must sell all its products at the planned
price, and then deliver them correctly to the
customers. It may fail to do so because of
competitors' undercut of the prices or introduction
of better products. Fashion, tastes and trends of
consumers might change.

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