Business risk refers to the potential for a company to experience losses or lower-than-expected profits due to various factors that can affect its operations and financial performance. This type of risk can arise from internal or external influences and is an essential consideration for business owners, investors, and stakeholders.

Characteristics
– Market Conditions: Changes in consumer preferences, economic downturns, or increased competition can impact sales and profitability.
– Operational Factors: Inefficiencies in production, supply chain disruptions, or management issues can lead to increased costs and reduced output.
– Financial Stability: High levels of debt or poor cash flow management can expose a business to financial distress.
– Regulatory Environment: Changes in laws or regulations can create compliance costs or restrict business operations.
– Technological Changes: Rapid advancements in technology can render products or services obsolete or require significant investment to keep up.

Examples
– A retail store may face business risk if a new competitor opens nearby, attracting customers away and reducing sales.
– A manufacturing company could experience business risk if a key supplier goes out of business, leading to production delays and increased costs.
– A restaurant may encounter business risk due to changing health regulations that require costly renovations or menu changes to comply with new standards.