Financial Planning II-1.01 Review

The term risk is used in business to refer to the 

• mistakes that employees make

• possibility of loss or gain

• chances that consumers take

• uncontrollable possibility of danger

An earthquake is an example of a __________ risk.

• speculative

• pure

• operational

• strategic

What do risk managers need to do to help their company successfully launch a new product?

• Ignore risks the company has encountered in the past

• Evaluate the potential gains and losses of the launch

Which of the following is an example of hazard risk: 

• tornados

• competition

• inflation

• product shortages

An example of an internal financial risk is:

• foreign exchange rate changes

• improper budget practices

Poor product development, unreliable manufacturing equipment, and product shortages are examples of __________ risks. 

• hazard

• financial

• operational

• strategic

What category of risk typically has the most impact on a business’s ability to reach its goals and objectives? 

• hazard

• financial

• operational

• strategic

Technological innovations can increase strategic risk for business by 

• making some products obsolete

• decreasing the supply of people seeking employment

A good source of information about a business’s retroactive risks would be a(n)

• environmental scan

• business incident log

Risks that have not happened before but could occur in the future are:

• retroactive

• prospective