Introduction:
Business risk refers to the possibility of loss or failure that a company may face due to various internal and external factors. Understanding the causes of business risk is crucial for organizations to effectively manage and mitigate potential threats to their operations and financial stability.

Internal Causes of Business Risk:
Internal causes of business risk stem from factors within the organization itself. These include:

1. Financial Risk: Inadequate financial management, excessive debt, poor cash flow, or insufficient working capital can pose significant risks to a business.

2. Operational Risk: Inefficient processes, inadequate quality control, equipment failure, or supply chain disruptions can lead to operational risks that impact productivity and profitability.

3. Strategic Risk: Poor decision-making, ineffective strategic planning, or failure to adapt to changing market conditions can expose a business to strategic risks, such as loss of market share or competitive disadvantage.

4. Human Resource Risk: Inadequate workforce planning, employee turnover, lack of skills, or labor disputes can create human resource risks that affect organizational performance and productivity.

External Causes of Business Risk:
External causes of business risk arise from factors outside the control of the organization. These include:

1. Market Risk: Changes in customer preferences, shifts in market demand, or intense competition can pose market risks and impact a company's sales and profitability.

2. Economic Risk: Economic fluctuations, inflation, interest rate changes, or exchange rate volatility can expose businesses to economic risks that affect their financial performance.

3. Legal and Regulatory Risk: Changes in laws, regulations, or compliance requirements can create legal and regulatory risks that businesses need to navigate to avoid penalties or reputational damage.

4. Technological Risk: Rapid technological advancements, cybersecurity threats, or disruptions in technology infrastructure can pose risks to businesses that fail to adapt and leverage emerging technologies.

Conclusion:
Identifying and understanding the causes of business risk is essential for organizations to develop effective risk management strategies. By addressing internal vulnerabilities and monitoring external threats, businesses can minimize the impact of risks and enhance their resilience in an ever-changing business environment.

Causes of business risk
1.Natural causes-human beings have little control over natural calamities like flood, earthquake, famine etc. They result in heavy losses of life. property & income in business.
2.Human cause - Human causes include such unexpected events like dishonesty. carelessness or negligence of employees. strikes. riots, management inefficiency etc.
3. Economic causes- They are related to a chance of of loss due to change in market condition e.g..fluctuations in demand and prices, competition.change in technology etc.
4. Physical causes -mechanical defects of failures may also lead to losses eg., bursting of boiler or machine may cause death or disturbances.
5. Other causes -These include unforeseen events like political disturbances. fluctuation in exchange rates etc.