Correct Answer - Option 2 : Employee risk
Internal Risk Factors for an Entrepreneur:
- Internal risks are faced by a company from within its organization and arise during the normal operations of the company.
- These risks can be forecasted with some reliability, and therefore, a company has a good chance of reducing internal business risk.
The three types of internal risk factors are:
1. Employee Risk: Personnel issues may pose operational challenges. Staff who become ill or injured and, as a result, are unable to work can decrease production.
Employee factor risk can include:
- Union strikes
- Dishonesty by employees
- Ineffective management or leadership
- Failure on the part of external producers or suppliers
- Delinquency or outright failure to pay on the part of clients and customers
2. Technological Risk: Technological risk includes unforeseen changes in the manufacturing, delivery, or distribution of a company's product or service.
3. Physical Risk: Physical risk is the loss of or damage to the assets of a company. A company can reduce internal risks by hedging the exposure to these three risk types.
