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Warm Up

Warm Up. Show your work Work in Pairs. Risks. Possibility of some kind of loss. Types . Human Theft Bounced Checks Natural Fire Flood Economic Stock market crash Competition moves in next door. Classification. Result Pure Risk - vehicle in an accident

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Warm Up

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  1. Warm Up Show your work Work in Pairs

  2. Risks Possibility of some kind of loss

  3. Types • Human • Theft • Bounced Checks • Natural • Fire • Flood • Economic • Stock market crash • Competition moves in next door

  4. Classification • Result • Pure Risk - vehicle in an accident • Speculative Risk - stock market • Controllability • Do something to reduce the risk • Insurability • Policy to protect against a loss • Has to be predictable, with statistics

  5. Credit Risks

  6. Benefits of Offering Credit • May help increase sales

  7. Risks of Offering Credit • Will the overall sales increase? • Customers may not pay back the money owed

  8. Types of Credit • Trade Credit - business to business • Pay price higher than cash price because of lapse in time to produce and deliver • Consumer Credit – business to customer • Loans – lump sum • Credit Cards – credit limit and use as needed

  9. Credit Policies • Established to reduce risk • Who may have credit • Which products can be purchased with credit • Terms of payment, interest, and length of time • Credit application to determine credit worthiness (why?) • Cannot sell used items at original price • Business will lose money

  10. Other Risks • Workplace dangers • Accidents • International Business • Language barriers • Unfamiliar with laws and customs • Products may not meet needs of that market • Travel and shipping costs

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