You face risks every day. You cannot cross the street without some danger that you will be hit by a car. Getting out of bed, driving a car, and opening a business all involve SOME risk.
Risk is simply the possibility of damage, injury, or loss.
Like individuals, business owners need to protect themselves against the risks they face. It is important for entrepreneurs to recognize potential risks they face and prepare effective strategies to deal with them. Contingency plans show that the entrepreneur is sensitive to important risks and is prepared to handle risks as they occur. Some of the risks that almost all businesses face involve competition, price changes, style changes, competition from new products, and changes from fluctuating economic conditions. Businesses also face risks beyond these market and economic shifts.