Question

Describe the various internal factors giving rise to internal risk.

Answer 1

The various internal factors giving rise to such risks are:

• Human factors: These are mainly due to human behaviour and various related aspects. Like strikes lock-outs by trade unions; negligence, dishonesty of an employee; accidents, deaths, failure of suppliers to supply raw materials, default in payment, etc.
• Technological factors: These are unforeseen changes in the techniques of production or distribution and may result in technological obsolescence. For example: The packaging industry has increased the shelf-life of various products like chips, milk, etc. so small producers of these products are affected.
• Physical factors: These factors result in loss or damage to the property of the firm. These may be due to failure of machinery and equipment used in business; fire, theft, damages in transportation, etc. They also include losses to the firm arising from.