Business Risk Analysis

Business risk can be analyzed between external and internal risks:

External risks:

• Changing legislation (e.g. minimum wage)
• Changing interest rates (especially with highly geared companies)
• Changing exchange rates
• Public opinion, attitudes, fashions (e.g. environmental factors)
• Price wars initiated by competitors (e.g. supermarkets)
• Import competition (e.g. the textile trade)
• Untried technologies and ideas (e.g. dot.com traders)
• Natural hazards (e.g. fire or flood or effects of global warming)
• Bad debts
• Litigation
• Environmental matters
• Inflation
• Political factors

Internal Risks:

Internal risks can also harm the company. These comprise:

• Failure to modernize products, processes, labor relations, marketing resulting in loss of competitive edge.
• Employees (e.g. ineffective recruitment or training policies)
• Board members (e.g. ineffective corporate governance)
• The process of dealing with suppliers or customers
• Excessive reliance on a dominance chief executive (thereby weakening internal control)
• Inadequate cash flow and the risk of corporate failure
• Inappropriate gearing (resulting in a lack of financial efficiency)
• Related parties resting in inappropriate terms of trading
• Inappropriate acquisitions and poor future prospects
• Overtrading resulting in cash shortages
• Excessive reliance on one of a few products, customers, suppliers
• Internal control weaknesses
• Computer systems failure and loss of records
• Fraud

 

Posted Date: 12/3/2012 6:01:25 AM | Location : United States

Ask an Expert

Related Discussions:- Business risk analysis, Assignment Help, Ask Question on Business risk analysis, Get Answer, Expert's Help, Business risk analysis Discussions

Write discussion on Business risk analysis
Your posts are moderated

Write your message here..

Related Questions

Classification of management representations, Classification of Management ... Classification of Management Representations The thing to note is which during the course of the audit the auditor obtains various representations from the management which ca

Existence - audit process, Existence - Audit Process In the case of ta... Existence - Audit Process In the case of tangible assets existence is confirmed through the auditor visually, considering the asset examining and concerned its condition.  Thi

Explain statutory audit, It is a compulsory audit Completed by a CA. Fin... It is a compulsory audit Completed by a CA. Finance Audit conduct by the CA to compliance the legal requirements of monitory issues.

Documentation of representations by management, Documentation of Representa... Documentation of Representations by Management The auditor would ordinarily involve in audit working papers evidence of management's representations in form of a summary of or

Need for an audit, The Need for an Audit If you take an example of a mode... The Need for an Audit If you take an example of a modern large liability company, we can clearly distinguish between the providers of funds and those who control those funds. The

How can scope of internal audit help you, Internal audit is an independent ... Internal audit is an independent assessment function which is recognized by the management of an company for the review of its internal control system as a service to the company.

Engagement procedures, What are the engagement procedures of auditing What are the engagement procedures of auditing

Audit, Why is studying Auditing different from studying other accounting to... Why is studying Auditing different from studying other accounting topics?

business risk and controls, What is business risk and what controls should... What is business risk and what controls should organizations have in place?  Business Risk and Controls Business or operational risks related to the activities carried out

Advantages, two advantages of an Audit to the shaire holders two advantages of an Audit to the shaire holders