Business Risk
This risk is linked to a certain uncertainty that a company has to obtain a certain result in its business, since the equilibrium point within the company must be the constant goal to be reached and the contribution margin must be sufficient to cover costs and operating expenses that are fixed.
There is a certain almost infinite variety of companies and situations that are competitive that must be faced, in which fixed cost controls, the harmonization of an ideal revenue, and the obtaining of a profit that meets the needs of the investors and the company itself.
Thus, the entrepreneur who wants to quantify his risks will have to systematically analyze the strength and weakness of his company, seeking to anticipate future problems, in the case of credit, he will also have to do it with his customers.
.Initial Risk: The risk that involves the start of activities, through an ideal dimensioning of the share capital necessary for the business and its own limits
relating to the talent of entrepreneurs or administrators.
.Cash Risk: Which translates into a lack of money, or an inadequate dimension to the payment of the commitments that are assumed, whether internal or external.
.Authority Risk: Occurs when personal limits on delegation of authority are not accepted, creating certain administrative confusion and generalized disobedience to orders.
.Leadership Risk: Occurs when the company does not have command or when this command is not perceived by process participants within the company.
.Succession Risk: Occurs when the company founder does not know who to "pass the baton" to in family terms at the same time when they are part of the administration.
The financial risk is highlighted by the excessive use of loans, whether in the short term, for the maintenance of operating activities, or in the long term, for investments in assets that are permanent. These activities are essential for
the maintenance of financial activities within certain parameters, coverage
financial costs is a task that requires proper planning, if so
not proceeding, there will be the risk of delay in the commitments and even the impossibility of achieving profitability.
The influence of politics is considerable to business as well and is enormous, especially in this field, the dynamics in the economic and tax rules that are
promoted by federal, state and municipal governments is such that they end up inhibiting the entrepreneurial action, causing instability and influence
sometimes negative, in business and in medium and long-term transactions, with all
the social and economic consequences that such fact entails.
Businesses live with uncertainties and insecurities, situations that however
which can be foreseen and maintained as contingent liabilities, among them, labor claims, imposition of fines, assessments, among others, stand out.
The ideal in an economy is that all transactions are carried out in cash, that is, without the need for term financing.
the identical alliance with suppliers, and this cycle needs to be favorable
under penalty of establishing a financial imbalance in the current assets versus current liabilities ratio.
The risk of insolvency is nothing more than a permanent risk in credit situations determined by the company's market, the formation of a provision for doubtful debts is vitally important for the financial health of the business, so the financial management must recognize this risk throughout
its magnitude and establish the rules and policies that will solve and above all, reduce the impact of this risk on the business profitability.
As risks with financial characteristics, I will highlight those that can
cause direct damage to results or the conduct of a healthy financial policy, such as an unexpected change in the cost of goods or
or driven by national economic problems, a reduction in sales prices due to economic or sector-specific problems, an unexpected and representative change in the exchange rate and also an unexpected and significant change in interest rates.