State the causes of risks involved in business?
Business risks arise due to a variety of causes, which are classified as follows:
Natural causes include natural calamities like floods, earthquakes, lightning, heavy rains, and famine, over which human beings have little control.
Human causes arise from unexpected events like dishonesty, carelessness, or negligence of employees, stoppage of work due to power failure, strikes, riots, and management inefficiency. Economic causes include uncertainties relating to demand for goods, competition, price, collection of dues from customers, and changes in technology. Financial problems like a rise in interest rates or higher taxes also come under these causes.
Other causes refer to unforeseen events like political disturbances, mechanical failures such as the bursting of a boiler, and fluctuations in exchange rates.
Explanation
The answer is derived from section 1.6.2 'Cause of Business Risks' in the provided textbook context. It categorizes the causes into four distinct types: Natural, Human, Economic, and Other causes. The explanation lists specific examples for each category as mentioned in the text, such as natural calamities for Natural causes and dishonesty/strikes for Human causes. It also incorporates the mention of financial problems under Economic causes and political disturbances under Other causes to ensure a comprehensive 3-mark answer.