deca test 2

When a rival's product on the market reduces sales of your company's product, your company is experiencing strategic risk caused by

competition

Which of the following is an example of a business risk that cannot be covered by insurance:

increase in interest rates

What category of business risk includes production problems and incompetent employees?

operational

Having well-planned buildings and providing effective employee training are ways that a business can __________ business risks.

prevent or control

Carefully selecting goods or services to sell is an example of handling business risks by __________ the risk.

preventing or control

Careful screening of credit customers is an example of handling business risks through

prevention

If a risk is small in terms of money, a business may decide to __________ the risk.

retain

When a business keeps a risk because management is unaware of it, the business is _________ the risk.

retaining

People who go into business know that the business may not succeed. This possibility is referred to as business

risk

Which of the following is a pure business risk:

robbery

Contractual agreements such as guarantees, surety bonds, and leases are examples of business risks being handled through

transfer

Requiring a contractor to purchase a surety bond is an example of handling business risk by __________ the risk.

transferring

The act of reducing or removing risks by shifting the risk factor to another person or business is referred to as __________ risk.

transferring

Management decides to hold its annual meeting in one U.S. city rather than another because of crime in that city. This is an example of __________ the risk.

avoiding

A garden store customer tripped over a plant, fell, and sued the store for damages. This is an example of a(n) __________ risk.

hazard

A hurricane that destroys a business is an example of a(n) __________ risk.

hazard

The general classifications of business risks are

hazard, operational, strategic, and financial.

A union strike that stops production at a manufacturing plant is a(n) __________ risk.

operational

Businesses can protect themselves from the risk associated with lost shipments by

purchasing transportation insurance

Financial loss from investing time and money to comply with accounting standards is an example of which strategic risk:

regulatory and political issues