Business Risks and Social Responsibility

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Questions and Answers

Which risk can a business typically manage through insurance?

  • Changes in government policies
  • Market recession
  • Damage to goods/property (correct)
  • Changes in fashion and customer preferences

What is a significant way a business can minimize non-insurable risks?

  • Market forecasting techniques
  • Implementing comprehensive insurance policies
  • Engaging in proper planning and preparedness (correct)
  • Developing new market trends

How do modern businesses generally view their social responsibility?

  • As an obligation to their stakeholders (correct)
  • As a legal requirement only
  • As a marketing strategy for increasing sales
  • As a secondary concern after profit maximization

Which of the following best represents a societal interest for modern businesses?

<p>Balancing profits with consumer satisfaction and public interest (C)</p> Signup and view all the answers

What is one responsibility businesses have toward their employees?

<p>Offering competitive wages and good working conditions (A)</p> Signup and view all the answers

Flashcards

Business risks

Potential problems or uncertainties impacting a company's operations and profitability.

Insurable risks

Risks that can be covered by insurance, e.g., fire or theft.

Non-insurable risks

Risks that cannot be covered by insurance, e.g., fashion trends, economic downturns.

Social responsibility (Business)

A company's duties to society, aiming to improve customers' and society's well-being.

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Stakeholders

Individuals or groups affected by a company's actions, including employees, customers, government, and shareholders.

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Study Notes

Risks and Uncertainties

  • Businesses face risks and uncertainties.
  • Risks can lead to losses.
  • Examples of risk events include:
    • Market recession
    • Changes in customer preferences
    • Changes in government policies
    • Changes in technology
    • Damage to property (fire, natural disasters)
    • Civil unrest
  • Insurance can mitigate some risks (e.g., fire, theft)
  • Non-insurable risks can be mitigated through planning and preparedness.

Societal Interest

  • Modern businesses prioritize societal well-being.
  • Businesses strive to balance profits, customer satisfaction, and public interest.
  • Businesses are increasingly producing eco-friendly products.

Social Responsibility

  • Modern businesses are conscious of their social responsibility
  • Businesses attempt to meet their responsibilities to various stakeholders:
    • Employees (fair wages, good working conditions, welfare benefits)
    • Customers (quality products at reasonable prices)
    • Government (paying taxes and duties)
    • Shareholders (maximizing wealth)

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