How Do Companies Manage Risk? What Are the Factors That

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The Answer is there are many factors contributes risk to a firm. the sources of risk to a firm are: the economic factors, political factors, business related factors and natural factors. economic factors like inflation rate, interest rate risk and market risk comes under systematic risk, which can not be avoid.

business risk and financial risk can be called as unsystematic risk, which can be minimized. by diversifying the business a firm can manage business risk, by entering into different segments, into different markets, with wide range of products, a firm can minimize the business risk. by using optimum combination of debt and equity capital, a firm can minimize its total cost of capital and by this the firm can earn more profits.

the unsystematic risk of a firm can be minimized upto zero, but the systematic risk can not be minimized or avoid, so it can not be skipped by the firm

How Do Companies Manage Risk? What Are the Factors That

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How Do Companies Manage Risk? What Are the Factors That

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