Business risk can be analyzed between external and internal risks

External risks

  1. Changing legislation (e.g. minimum wage)
  2. Changing interest rates (especially with highly geared companies)
  3. Changing exchange rates
  4. Public opinion, attitudes, fashions (e.g. environmental factors)
  5. Price wars initiated by competitors (e.g. supermarkets)
  6. Import competition (e.g. the textile trade)
  7. Untried technologies and ideas (e.g. traders)
  8. Natural hazards (e.g. fire or flood or effects of global warming)
  9. Bad debts
  10. Litigation
  11. Environmental matters
  12. Inflation
  13. Political factors

Internal Risks

Internal risks can also damage the company. These include:

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