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Risks and Surprises

Risks and Surprises. Lesson 13. Objectives. Give examples of the three main types of business risk – economic, human, an natural Describe the elements of an effective risk prevention plan Explain the different types of insurance and calculate the cost of premiums

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Risks and Surprises

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  1. Risks and Surprises Lesson 13

  2. Objectives • Give examples of the three main types of business risk – economic, human, an natural • Describe the elements of an effective risk prevention plan • Explain the different types of insurance and calculate the cost of premiums • Compute merchandise losses based on book value, inventory value, and sales over time • Weigh each of the following in terms of financial impact: on-demand repair calls, extended product warranties, and service contracts

  3. What is Business Risk? • Involves circumstances that can threaten financial loss or failure • Recognize potential risks and find a way to handle them with least negative impact

  4. Types of Business Risks • Economic Risks: • Caused by changes in the business climate • Recession • Depression • Recovery • Prosperity

  5. Human Risks: • Customer Risks: • Theft, bad checks, credit card fraud • Employee Risks: • Theft, carelessness and error, • Vendor Risks: • Error in shipments • Computer Risks: • Viruses, hackers

  6. Natural Risks: • Acts of nature • Earthquakes, fires, floods, hurricanes, landslides, and tornadoes

  7. Handling Risks • Risk Prevention: • Pre-employment screening and training of employees • Computer virus detecting software, passwords, and training employees about proper use • Safe workplace

  8. Risk Transfer: • Describes the process of giving the responsibility of dealing with certain business risks to another business • Insurance: • An agreement between an insurance company and a business for coverage of a particular business risk in exchange for s specified amount of money • Warranty: • A guarantee by a manufacturer that a product will perform • Service Contract: • An agreement between the retailer and the equipment dealer that covers routine, preventive maintenance and specific repairs to equipment

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