What are the risks for businesses – concept, types and economic risk assessment

Almost any business activity is associated with a certain amount of risk. Risk is an indicator of conditions or events that can lead to losses. It is proportional to the probability of occurrence of this event and the amount of damage that it can cause.

Advanced technologies in modern human living are causing a constant increase of information a person owns and handles, which increases the difficulty in relationships both in the social system and the living environment. At the same time, the processes of globalization, scientific and technological development are accelerating, and world’s resources are growing more and more scarce each year.

This means that more and more causes of influence on the nature and direction of human work, as well as the unpredictability of this impact increases. As a result, the level of development uncertainty is constantly growing, it is becoming increasingly difficult to predict indicators, formulate goals and implement activities to achieve them. All this means that special attention should be paid to the issues of risk research. The concept of risk The doctrine of risk is basic to the theory of the development and operation of various systems. Due to the huge number of reasons, an absolutely accurate prediction of outcomes and states becomes impracticable. This means that there is always the likelihood of different scenarios that are actually a source of risk.

Based on the generalization of different formulations, the following definition can be presented: risk is uncertainty in the process of achieving a goal, the probability of a loss, the failure to reach plans. In a broad sense, uncertainty is inherent in all areas, even if they do not specifically affect human activity. But on the basis of definitions, one can realize that the risk category is associated not only with the probabilistic course of events, but also with the relation of the value of a person to reality. In this case, we are talking not only about uncertainty, but also about probable losses, since a person is not disturbed by the possibility of either action, if the implied result does not concern his interests. Therefore, in terms of the domination of financial values, risk is interpreted mainly as an attribute of industrial and social-financial relations. In this regard, the financial risk term is typically used to reflect an investor’s uncertainty of collecting returns and the accompanying potential for wealth loss.