Various Types Of Common Business Exposures

EXPOSURE ? 

- Consists of the potential financial effect of an event multiplied by its probability of occurrence . -

RISK ?

- Synonymous with probability of occurrence . -

Thus , an EXPOSURE is a risk times its financial consequences .

THE VARIOUS TYPES OF COMMON BUSINESS EXPOSURES

Common Business Exposure

1. Excessive Costs - It reduce profits .The excessive costs of the business are like expenses for advertising , purchases of excessive materials .
2. Deficient Revenues - It reduce profits . The example are like late shipping the goods to customer , and bad debt expenses on credit .
3. Loss of Assets - May be lost due to sudden emergency like flood and other than that , theft , wrongly key-in the data .
4. Inaccurate Accounting - Errors in record keeping may lead to inaccurate information for the management .
5. Business Interruption - Due to temporary suspension or ultimately the dissolution of the business .
6. Statutory Sanctions - Due to penalties that might arise form judicial or due to business law .
7. Competitive Disadvantage - Is the inability of an organization to remain viable in the marketplace .
8. Fraud & Embezzlement - Fraud is the international perversion of truth in order to induce another to part with something of value or to surrender a legal right . Embezzlement occurs when assets are fraudulently appropriated to one's own use .