1) Raghunath Gorkha had a matchstick factory in Nepal which got destroyed by the recent earthquake. 2) Mr. Arya, a senior manager in a telecom company, shared confidential information about the company with a competitor which led to huge losses for the company. 3) Vodafone Co. was charged with evasion of tax and asked to pay a fine in crores which would lead to heavy losses for the company. 4) Typewriters becoming redundant because of laptops. (a) Which characteristic of business is being referred to in all the above cases? (b) How can you classify the different causes based on this characteristic?
Answer (1)
(a) The characteristic of business being referred to in all the above cases is 'Risk'. Risk is an inherent part of any business where the outcomes of decisions or unforeseen events can lead to potential financial losses or business disruptions.
(b) The different causes can be classified based on the characteristic of risk in the following ways:
Natural Disaster Risk : In the first case, Raghunath Gorkha's matchstick factory was destroyed by an earthquake. Earthquakes are natural disasters that are unpredictable and can cause significant damage to businesses.
Human Risk : The second instance involves Mr. Arya, who shared confidential information with a competitor. This is an example of human risk, where employee actions can adversely affect the business.
Compliance Risk : The third scenario involves Vodafone Co. charged with tax evasion. This situation exemplifies compliance risk, where failing to adhere to laws and regulations can result in substantial fines and penalties.
Technological Risk : The final example involves typewriters becoming redundant due to the emergence of laptops. This is an example of technological risk where advancements in technology can render existing products or services obsolete.
Each of these risks highlights the potential challenges a business may face due to various reasons, whether they are natural, human, regulatory, or technological. Understanding and preparing for these risks is crucial for the sustainability and success of any business.
