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Economic Risk

Economic risk relates to the possibility of an activity becoming economically unstable due to various internal and external factors. It is important to recognize economic risk before starting a new venture in order to assess if future costs will outweigh the benefits. Economic risk includes the risk of rising costs of raw materials and commodities which can decrease profitability if product prices cannot be increased. Economic risk can be minimized by diversifying investments across different countries, currencies, industries and paying attention to shifts in government policies.

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Rubab Kanwal
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111 views1 page

Economic Risk

Economic risk relates to the possibility of an activity becoming economically unstable due to various internal and external factors. It is important to recognize economic risk before starting a new venture in order to assess if future costs will outweigh the benefits. Economic risk includes the risk of rising costs of raw materials and commodities which can decrease profitability if product prices cannot be increased. Economic risk can be minimized by diversifying investments across different countries, currencies, industries and paying attention to shifts in government policies.

Uploaded by

Rubab Kanwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Economic risk

It is necessary to recognize economic risk before beginning the ventures in order to assess the
probability of future costs being overweighed by the benefits. Economic risk is danger correlated
with project being affected by both financial and other environmental influences. Economic risk
management is critical for determining the total project risk. Economic hazards have a significant
effect on the volume of sales and expenditures, and ultimately on the income of the business.
Economic risk relates to the possibility of an activity becoming economically unstable owing to a
number of factors vitiating from shifting global patterns to illegal practices that wreck the result
of a project. Nevertheless, it may be that by opting for foreign mutual funds to have immediate
diversification, investing time and time again in various nations, currencies, resources, or foreign
industries.
It includes risk of rising raw energy and materials costs. Increasing costs for commodity supplies
raise the cost of manufactured goods. If the company runs in a competitive environment and the
price of the product cannot be increased, the cost increases and the profitability decrease. The
decline in Starbucks supply stock rates often contributes to a drop in productivity, even though
the rate stays constant.
We can minimize your exposure to economic risks by overseeing your investments and paying
attention to changes in government policies.

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