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What is Business Risk?

 , October 25, 2016 updated on December 29, 2022
A business risk is the potential for losses related to a business. Risks surround everything that a business big or small does. As such, it is common for businesses to identify risks on a regular basis in order to find ways to avoid or reduce future losses. The following are illustrative examples of business risk.


A family-run cafe opens a new location in the lobby of a hotel. They perform an analysis that suggests the location will receive at least 2200 customers a week. There's a chance this analysis will be wrong and few customers will visit.

Exchange Rate

A Canadian firm enters a contract with an American firm to sell them parts for $10 USD each. The firm enjoys a 40% profit margin on each sale. However, if the Canadian dollar goes up in value margins will be reduced because sales are in USD and expenses in CAD.


An ecommerce site will lose millions of dollars a day in revenue if its web site goes down due to a technical failure or a information security incident.

Human Resources

A small business with three employees may have to close its doors for a few days if people get sick at the same time.
Overview: Business Risk
Definition (1)The potential for future losses related to a business.
Definition (2)The potential that a business will not achieve goals due to chance events.
Definition (3)The potential for losses that a business accepts in pursuit of reward.
Related ConceptsPositive Risk
Risk Identification
Business Risks
Risk Management
Risk Mitigation


This is the complete list of articles we have written about risks.
AI Risk
Risk Avoidance
Brand Risk
Budget Risk
Business Risks
Change Risk
Compliance Risk
Concentration Risk
Cost Risk
Country Risk
Credit Risk
Demand Risk
Dread Risk
Economic Risk
Exchange Rates
Existential Risk
External Risk
Financial Risk
Force Majeure
Good Risk
Health & Safety
Human Error
Risk Identification
Infinite Risk
Inflation Risk
Inherent Risk
Interest Rates
Internal Risks
Investing Risk
Legal Risk
Liquidity Risk
Model Risk
Natural Disasters
Negative Risk
Operations Risk
Passive Risk
Personal Risk
Political Risk
Process Risk
Procurement Risk
Product Risk
Project Risk
Pure Risk
Quality Risk
Risk Mitigation
Refinancing Risk
Regulatory Risk
Reputational Risk
Residual Risk
Resource Risk
Revenue Risk
Risk Appetite
Risk Aversion
Risk Examples
Risk Management
Risk Management Process
Risk Matrix
Risk Meaning
Risk Measurement
Risk Taking
Risk Tolerance
Risk Triggers
Risk vs Issue
Risk vs Opportunity
Risk vs Uncertainty
Risk-Reward Ratio
Seasonal Risk
Secondary Risk
Security Risk
Settlement Risk
Risk Sharing
Speculative Risk
Strategic Risk
Strategy Risk
Supply Risk
Systemic Risk
Tactical Risk
Taxation Risk
Technology Risk
Risk Transfer
Unforced Error
Upside Risk
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Business Risks

A list of common business risks.

Risk Treatment

The four things that can be done about risk.

Risk Mitigation

A list of techniques for reducing risk.

Positive Risk

The potential that you'll achieve too much of a good thing.

Dread Risk

Any risk that people have a strong aversion too.

Risk vs Opportunity

The surprising similarities between risk and opportunity.

Risk Management vs Contingency Planning

The difference between risk management and contingency planning.


The common types of uncertainty in decision making and strategy.

Inventory Risk

The common types of inventory risk.

Business Risk Management

An overview of common business risk management techniques.

Risk Management

An overview of the risk management process.

Cascading Failure vs Resilience

An overview of cascading failure and resilience.

Business As Usual

An overview of business as usual.

Risk Mitigation vs Risk Reduction

The difference between risk mitigation and risk reduction.

Risk Control

A list of common risk controls.

Risk Value

A definition of risk value with example calculation.

Risk Impact

The common types of risk impact.

Risk Communication

A definition of risk communication with examples.

Risk Management Process

Overview of the steps in a risk management process.
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