Page 243 - RISK Management IC 86

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Q1. Industrial and commercial firms associated with
the conduct of any business are in addition
exposed to other uncertainties - what are the
additional risks ? Explain each in detail.

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

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