--- title: What Is Business Risk? description: Every business faces risks, and the ones that successfully manage them are the ones that survive and even thrive. Risks can be internal or external, and some can be predicted and possibly avoided, while others are unavoidable. Learn more about business risks. image: https://www.realized1031.com/hubfs/what%20is%20business%20risk%3F-537534375.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # What Is Business Risk? Posted Jul 17, 2022 ![what is business risk?-537534375](https://www.realized1031.com/hs-fs/hubfs/what%20is%20business%20risk%3F-537534375.jpg?width=750&height=392&name=what%20is%20business%20risk%3F-537534375.jpg) Dun and Bradstreet, a renowned data and analytics firm, defines [business risk](https://www.realized1031.com/glossary/business-risk) as “anything that could threaten a company’s financial health or lead to insolvency.” Of course, every business faces risks, and the ones that successfully manage them are the ones that survive and even thrive. Risks can be internal or external, and some can be predicted and possibly avoided, while others are unavoidable but to which a company can potentially respond. ### Financial Risks Are Critical Financial risk is anything that endangers a company's economic growth, stability, and profitability. These risks typically come from external sources like suppliers, customers, and macroeconomic forces. That's not always the case, though. For example, if a company takes on an excessive amount of debt, the resulting credit risk is caused by internal actions and can lead to instability and default. On the other hand, if legal regulations change in response to outside forces, that can create financial pressure on a company that it could not anticipate but must manage. ### Operational Risks Are Diverse Operational risks threaten the company’s ability to conduct business as usual. There are many ways for operations to be disrupted. For example, suppose a major rainstorm floods your headquarters or a significant earthquake destroys the building. Your administrative team can probably work remotely, but if your operation is manufacturing, losing a building will substantially impact your business. Similarly, technology can disrupt operations without harming a physical presence. Cyberattacks are increasingly common and may prevent some or all of your team from working. The employees may also disrupt operations. For example, labor disputes may lead to slowdowns or strikes. Less immediately, a company's failure to successfully attract, hire, retain, and train employees can cause your production to become outdated, or your processes may be obsolete. ### Compliance Risks Require Company Vigilance Financial firms must follow myriad rules meant to protect their customers and ensure that the company isn't facilitating illegal transactions. But other industries have their own regulations to follow, such as privacy laws governing healthcare companies and safety rules for manufacturing businesses. ### Reputation Risk The risk of a bad reputation has increased as technology spreads both truth and rumors like fire across social media. One public misstep by a company’s executive or a “viral” video of a negative customer service interaction can derail a business from its path. Data breaches often cause public concern over a company’s operations and may discourage potential customers from using the service. Publicity over poor working conditions or poorly handled terminations may have the same effect as a "hot microphone" moment when a company representative speaks out of turn. These can evolve into public relations crises if not well-managed. ### How to Manage Business Risks One of the effective methods of managing business risks is trying to anticipate them and planning a potential response. This risk management approach is an ongoing discipline within successful organizations. It's vital to have a team responsible for responding to a natural disaster, for example, just as it is to have a legal team on hand to deal with compliance issues.   This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. 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For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Dun and Bradstreet, a renowned data and analytics firm, defines business risk as “anything that could threaten a company’s financial health or lead to insolvency.” Of course, every business faces risks, and the ones that successfully manage them are the ones that survive and even thrive. Risks can be internal or external, and some can be predicted and possibly avoided, while others are unavoidable but to which a company can potentially respond. Financial Risks Are Critical Financial risk is anything that endangers a company's economic growth, stability, and profitability. These risks typically come from external sources like suppliers, customers, and macroeconomic forces. That's not always the case, though. For example, if a company takes on an excessive amount of debt, the resulting credit risk is caused by internal actions and can lead to instability and default. On the other hand, if legal regulations change in response to outside forces, that can create financial pressure on a company that it could not anticipate but must manage. Operational Risks Are Diverse Operational risks threaten the company’s ability to conduct business as usual. There are many ways for operations to be disrupted. For example, suppose a major rainstorm floods your headquarters or a significant earthquake destroys the building. Your administrative team can probably work remotely, but if your operation is manufacturing, losing a building will substantially impact your business. Similarly, technology can disrupt operations without harming a physical presence. Cyberattacks are increasingly common and may prevent some or all of your team from working. The employees may also disrupt operations. For example, labor disputes may lead to slowdowns or strikes. Less immediately, a company's failure to successfully attract, hire, retain, and train employees can cause your production to become outdated, or your processes may be obsolete. Compliance Risks Require Company Vigilance Financial firms must follow myriad rules meant to protect their customers and ensure that the company isn't facilitating illegal transactions. But other industries have their own regulations to follow, such as privacy laws governing healthcare companies and safety rules for manufacturing businesses. Reputation Risk The risk of a bad reputation has increased as technology spreads both truth and rumors like fire across social media. One public misstep by a company’s executive or a “viral” video of a negative customer service interaction can derail a business from its path. Data breaches often cause public concern over a company’s operations and may discourage potential customers from using the service. Publicity over poor working conditions or poorly handled terminations may have the same effect as a \"hot microphone\" moment when a company representative speaks out of turn. These can evolve into public relations crises if not well-managed. How to Manage Business Risks One of the effective methods of managing business risks is trying to anticipate them and planning a potential response. 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