Features of Business Risk
(i) Business Risks Arise Due to Uncertainties Future is uncertain and one cannot predict exactly what is going to happen. Therefore, uncertainties and contingencies like natural calamities, changes in government policies, changes in demand and prices, etc create risk for business.
(ii) Degree of Risk Depends Mainly upon the Nature and Size of Business The amount of risk in the business is determined by the nature of goods and services by it and the size of business i.e., whether business is being operated on large scale or small scale.
(iii) Profit is the Reward for Risk Taking Profit and risk are directly related to each other. A businessman undertakes risk because he expects to make high profit. In line with the famous saying ‘ more risk, more profit’, if the risk is high the1 chance of large profits is also high, whereas if the risk is low, profit may also be low.