Chapter-11 Risk and insurance Meaning of Business Risk Business risk means the possibility that a business may face loss or may not earn the expected profit because the future is uncertain. It arises from factors that affect the normal working of a business, such as changes in customer demand, increase in production costs, competition, changes in government rules, or natural events. Since these factors cannot be fully controlled by the business, profit is never guaranteed. Business risk exists in every type of business, whether small or large. The chance of failure, loss, or lower income due to uncertain business conditions is known as business risk. Meaning of Insurance Insurance is a method of protection against financial loss caused by unexpected events such as accidents, illness, fire, theft, or death. It works on the principle of risk sharing, where many people contribute a small amount of money called a premium to an insurance company. In return,...
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