Volvo receives Europe’s largest order for electric buses

Volvo Buses has received the largest single order for electric buses in Europe. Volvo Buses will deliver 157 electric articulated buses to Transdev starting in 2020. The buses will operate on a number of routes in Gothenburg. With their introduction, emissions and noise will be significantly reduced, and the electric buses will be able to operate in sensitive areas or zones with special restrictions. 

“It is immensely gratifying that we have secured Europe’s largest ever single order for electric buses – no less than 157 buses. Volvo is a pioneer in electromobility and sustainable public transport. We have a holistic system perspective for cities that encompasses vehicles, services and charging infrastructure. We focus on solutions that offer high reliability and high service levels for route operators and passengers. This large order confirms that electric buses are already recognised as a sustainable and financially viable solution for demanding high-capacity public transport needs,” says Håkan Agnevall, President of Volvo Buses

“Transdev is today Europe’s leading operator of electric buses and we know what challenges there are with the transition to electric propulsion. We’ve therefore been extremely thorough in choosing a partner with a holistic approach, a partner that will be able to deliver both buses and charging infrastructure on time and with excellent uptime. Being able to announce that we have chosen Volvo as our partner for city bus operations in Volvo’s home city of Gothenburg is of course particularly satisfying,” says Gunnar Schön, CEO of Transdev Sweden

All of the buses will be of the recently launched 7900 Volvo Electric Articulated model. The Volvo Electric Articulated can carry 150 passengers with an energy consumption that is 80 per cent lower than that of a corresponding diesel bus. The Volvo Electric Articulated combines high passenger capacity with low operating costs. The buses will be charged at quick-charge stations along the route, using the industry common charging interface OppChargeTM, in order to ensure the most efficient operation possible. In addition to the electric buses, the order includes 27 Euro VI buses for regional operations, running on biodiesel. 

“For us as a mobility supplier, it is vital to always be able to offer passengers good service and functional vehicles, but it is also important that our drivers have a good working climate. New buses, in particular quiet electric buses, not only result in cleaner cities – they also improve the everyday working environment,” explains Gunnar Schön.

“Electromobility creates new exiting opportunities for urban planning since we now get emission-free and quiet public transport that can operate closer to the city’s residents. Volvo aims to be a leader in increased electrification and to be a partner for cities that wish to implement long-term sustainable public transport solutions for their inhabitants,” concludes Håkan Agnevall.


Gothenburg, November 5, 2019
For further information, please contact: 
Joakim Kenndal, Manager Media Relations, Volvo Bus Corporation,                       
Phone +46 739-02 51 50 or e-mail [email protected]


Flarin Holdings completes first round of fundraising for revolutionary drug

Investment from IW Capital to drive rapid commercialisation of world’s first lipid formulated ibuprofen

Flarin Holdings Limited today announces the completion of its first round of fund-raising by IW Capital. Flarin Holdings was recently demerged from Infirst Healthcare Limited in order to provide greater focus on the rapid commercialisation of Flarin.

Flarin is a unique and patent protected lipid formulated ibuprofen which at a dose of 1200 mg/day has shown to be as effective as 2400mg/day of standard liquid ibuprofen capsules in patients with acute joint pain 1. Flarin’s unique lipid formulation also helps to shield the stomach from damage 2.

“The very positive response we have had from presenting Flarin to new investors has given us great confidence in taking Flarin to the next stage of its commercial development,” says Andrew Macmillen, Managing Director. “These new funds give Flarin greater ability to increase investment in marketing in the UK as well as building a network of distributors and licensing partners in other countries.” 

Luke Davis, IW Capital chief executive, said:

“We are hugely excited to be involved with this innovative pharmaceutical product at an early stage in its commercial development. It is also key to be able to work with such an experienced management team in the pharmaceutical and healthcare arena.

“Our research shows that around 20% of private investors are looking to invest within Pharma and Biotech while half of this group is put off by Big Pharma. With this in mind we were not surprised that the initial investment target for Flarin was over-subscribed by IW capital’s network of net-worth individuals and independent financial advisors.

There is a fantastic exit opportunity here with the product already fully developed and on sale in UK pharmacies, meaning there is already an established sales infrastructure in place.”

If you have any questions about the release or would like to speak to Luke please don’t hesitate to get in touch.

About Flarin Holdings 
Flarin Holdings is a new company demerged from Infirst Healthcare Limited in order to focus on commercialising Flarin’s unique lipid formulation of ibuprofen.

About Flarin Lipid Formulation Technology
Flarin is a unique and patent protected lipid formulated ibuprofen which at a dose of 1200 mg/day has shown to be as effective as 2400mg/day of standard liquid ibuprofen capsules in patients with acute joint pain1. Flarin’s unique lipid formulation also helps to shield the stomach from damage2.

About IW Capital
IW Capital is a leading SME investment provider specialising in private equity and debt financing, having facilitated well over c.£100m in development capital investment in UK companies.

Bierma- Zeinstra SMA, Conaghan PG, Brew J et al. Osteoarthr Cartil:  2017 25; 12: 1942-1951 Open Access: http://dx.doi.org/10.1016/j.joca.2017.09.002 Accessed at: http://www.oarsijournal.com/article/S1063-4584(17)31197-4/fulltext
2 Data on file, Infirst Healthcare Limited.

www.flarin.co.uk
https://www.linkedin.com/company/flarin/

The Financial World Will Be Completely Reliant on Big Data Within Five Years

Over a third of CFOs see big data as a threat to employment

Marieke Saeij
Marieke Saeij

London, 05 November 2019 – Almost two-thirds (64%) of CFOs expect that within the next five years the financial world will no longer be able to operate without big data, however, 13% of CFOs think this is already the case. Currently, financial directors are mainly using big data to make well-informed decisions (54%), to make predictive analyses (41%) and to analyse large, unstructured databases (29%). Almost one-fifth of CFOs (18%) do not use big data at all, according to the results of the 2019 FinTech Barometer, an annual survey conducted by order-to-cash specialist Onguard.

Impact on employment

More than a third of CFOs (38%) expect big data to have a significant impact within the financial sector, particularly on aspects such as job opportunities, with 36% of CFOs seeing big data as a threat to employment. Trends such as robotisation and Artificial Intelligence (AI) are also on the radar of financial directors, with 42% of CFOs expecting AI to have a major impact on employment opportunities and 30% of CFOs seeing robotisation as the biggest threat to jobs.

Marieke Saeij, CEO, Onguard: “I’m not surprised that CFOs expect to be completely dependent on big data within such a short timeframe. Big data can help them, as well as finance professionals within their organisations, with the execution of their work. Finance professionals have a great deal of information from both internal and external sources that is of added value for both the performance of the organisation and customer service. The more information that is available about the market and customers, the better finance professionals can advise customers. Thanks to big data, risks can be assessed more accurately and it is also possible to predict in real-time whether and when customers will start paying so as an organisation, you can properly anticipate this. This development will require finance professionals to develop new skills, such as greater analytical capacity, as a necessity.”

About Onguard
Over the past 25 years, Onguard has grown from a specialist in credit management software to a market leader in innovative solutions in the field of order to cash. The integrated platform ensures that all processes in the order-to-cash chain are optimally linked and that critical data can be shared. Intelligent tools which interface seamlessly combine to provide an overview and control of the payment process and help build lasting customer relationships. Users in over 50 countries worldwide work with the Onguard platform on a daily basis to achieve successful management and tangible results in Order to Cash and Credit Management. Read more at http://onguard.com/

Vatican Facing Bankruptcy Due to Decreased Donations

Recent leaks claiming that the Vatican would be facing bankruptcy added to the statements made by the investigative author Gianluigi Nuzzi in his just-published book “Giudizio Universale”, have caused a stir in Rome despite the denials of two leading bishops.  

Vatican Facing Bankruptcy Due to Decreased Donations

In the book “Giudizio Universale” (Universal Judgement), Italian journalist Gianluigi Nuzzi exposed unpublished documents about the deteriorated Vatican’s financial situation. The author ensures that financial and real estate assets mismanagement, along with a notorious decrease in donations, are the main reason why the Vatican is facing bankruptcy. 

Dramatic loss

According to the book published last October 21, last year, the Holy See lost 44 million euros. Nuzzi claims that at the edge of bankruptcy, the measures the Pope has been taking are not enough. The situation is so severe that last year, the Church decided to sell families’ jewellery such as the property “Santa María de Galería,” 424 hectares on the outskirts of Rome. 

Decline of donations

The data presented in the book shows that the contributions to the Church, known as “Obolo de San Pedro,” have been reduced by half in a decade (from 101 million in 2006 to 51 in 2008). Because of the crisis, 58% of the received amount serves to clean up accounts, and only 20% remain as a deposit. As Nuzzi explained, the result is that of each ten euros, only two end up serving the purpose of helping those in need. 

A surprising fact the journalist and author describes is the origin of the donations: dioceses are the first source, foundations come in second place, and private donors come just in third place. Italy and Germany are the most prominent supporters with more than 1.5 million euros each; their support decreased by more than 20%. 

The official response

The head of the Administration of the Patrimony of the Apostolic See (APSA), Bishop Nunzio Galantino, promptly denied that the finances of the Holy See were about to go bankrupt. “There’s no bankruptcy or default here. There’s only a need for a spending review,” Galantino insisted. “The ordinary management of the APSA in 2018 closed with a profit of over 22 million,” he expressed to the “Vatican News.”

Regarding the properties managed by the APSA and the accusations of mismanagement, Galantino explained that they include 2,400 apartments located mostly in Rome and Castel Gandolfo plus another 600 shops and offices.

 In response to Nuzzi’s statement that 40% of the patrimony doesn’t grant income, Galantino explained that those not generating revenue are service apartments or offices of the Curia. He also told that about 60% of the apartments are rented for reduced rent, to employees in need.

 He considered this a kind of social housing, something that, when done by private companies, is praised, but when it’s the Vatican doing it, it is considered incompetent. 

 “There is no threat of collapse or default here. There is only the need for a spending review. And that is what we’re doing. I can prove it to you with numbers,” Galantino said on October 22.

Is the Vatican facing bankruptcy or not? 

This is something that only time will reveal. So far, the bells of broke seem to be tolling despite the official statements. 

See also about Business Risks.

The growing movement of people fuels demand for international tax advice

4 November 2019

The increasing global movement of people and businesses is driving the significant growing demand for international tax advice. 

The observations come from deVere Tax Consultancy, part of deVere Group, one of the world’s largest independent financial advisory organisations, which operates in more than 100 countries.

The world is currently experiencing the highest levels of movement on record.  

According to the International Organization of Migration, the leading inter-governmental agency in the field, approximately 258 million people – or one in every 30 – were living outside their country of origin in 2017.

That is both a record high – and a number that has beaten all expectations. Indeed, a 2003 projection anticipated that by 2050, there would be around 230 million based outside their birth nation. But the latest projection has been dramatically revised upwards – there will be more than 405 million living away from their country of birth by 2050.

James Green, divisional manager at deVere Group, observes: “We’ve noted a year-on-year increase in international tax advice enquiries of more than a third.  

“This can be attributed, we believe, to three key factors.

“First, is the increasing movement of people. Whether driven by geopolitical, work or lifestyle reasons, more and more individuals are on the move around the world.  

“In addition – and despite the rhetoric of some populist politicians – globalisation in the world of trade and commerce is here to stay and is, if anything, gaining momentum as it encourages economic growth, creates jobs, makes firms more competitive, and lowers prices for consumers.

“Second, since the global financial crisis both individuals and companies have become more financially literate and aware of the importance of specialist financial advice, especially when it comes to cross-border affairs.

“And third, the reporting and tax filing requirements are increasing in most jurisdictions.  For instance – and this is just one example – in the U.S. where the Foreign Account Tax Compliance Act, or FATCA, is almost universally recognised as being burdensome, onerous and complex.”

Director of deVere Tax Consultancy, Mitch Young, notes: “The enquiries are coming from both internationally-mobile individuals and firms who are seeking advice on compliant and up-to-date tax filing, residency issues, inheritance tax, self-assessment, property tax structuring and disclosures, national insurance contributions, trusts and wills.

“Due to this considerable surge in demand for our services we have recruited more senior tax consultants, account managers and in-house barrister intermediaries.

“We have also launched our first tax apprenticeship scheme to find and train the top tax talent of the future.  In addition, we’re in the process of building an international tax network to meet the needs and expectations of our clients.” 

James Green concludes: “The demand for international tax advice is set to grow further still as the world becomes increasingly globalised and as the cross-border regulatory landscapes continue to evolve – and at a faster pace.”

Desentum will run a clinical trial on its allergy vaccine this winter supported by 4 M€ of new investments

Finnish biopharmaceutical company Desentum is about to initiate a first-in-human clinical trial with its birch pollen hypoallergen designed to improve immunotherapeutic treatment of birch pollen allergy. In a funding round arranged by Springvest Oy, the company raised 4 million euros that it intends to use for funding clinical trials, developing new hypoallergens and advancing business goals.

Desentum develops novel type of immunotherapeutic hypoallergens, so called allergy vaccines. The hypoallergens are biotechnologically produced, modified allergen proteins aimed for improving the efficiency of allergen immunotherapy while also reducing the time required for treatment. The lead product candidate, birch pollen hypoallergen DM-101 (Bet v 1 dm), has produced good results in preclinical tests assessing allergenicity and immunogenicity, and is now advancing to clinical phase.

In clinical trials, the safety and efficacy of a new medicinal product is demonstrated in volunteer study subjects. The primary objective of Desentum’s first clinical trial is to confirm the safety of DM-101, but information about the immunological response generated by the hypoallergen is also collected.

“For the past couple of years, we have worked together with international allergen immunotherapy experts to prepare for the clinical studies. The first study plan was submitted for regulatory and ethics evaluation in the summer of 2019. The study will be performed in Finland and the dosing is scheduled to be completed before 2020 birch pollen season”, explains Pekka Mattila, CEO of Desentum.

To strengthen the company’s financial position, Desentum initiated a funding round in September. It was carried out by a Finnish investment service company Springvest Oy. The public offering was fully subscribed, which translates to approximately 4 million euros of collected capital. Desentum plans on using the majority of the proceeds for funding early-stage clinical trials. The remaining funds will be used for the research and development of new hypoallergens as well as for partnering activities to support late-stage clinical trials and market access.

“We are very happy with the results of the public offering. The collected capital enables us to focus on our primary goal, which is testing the novel immunotherapeutic allergy treatment and bringing it to the market. Today, allergy affects a huge number of people, and I believe that in addition to the expectation of financial return, many investors also hope that our technology could solve a health problem that impacts the life of their family or friends”, says Mattila and continues: “This is our target as well. We have started by looking at birch pollen allergy, but our platform can be used for producing hypoallergens from other allergens, too. We are already developing similar products to address peanut, grass pollen, dog and horse allergies.”

Immunotherapy in allergy treatment

Allergy is one of the most common chronic conditions in Europe. Today, more than 150 million Europeans suffer from allergic diseases. For one in five patients the condition is severe enough to create a constant threat of a severe allergic reaction or an asthma attack. European Academy of Allergy and Clinical immunology (EAACI) predicts that by 2025 allergy will affect half the population in Europe. Allergies cause social and economic burden such as health care costs, missed school and work days and impact on the daily lives of the patients.

Allergies are generally managed by medication that alleviates the symptoms. The most common medications are antihistamines and corticosteroids. Immunotherapy is the only treatment currently known that affects the mechanism of allergy. It re-educates the immune system to tolerate the allergen, decreasing the need for medication. Immunotherapy can be administered as injections or sublingual tablets or drops, and the treatment usually takes a few years. The novel immunotherapeutic products that are under development aim for speeding up the treatment as well as improving the safety, efficacy and convenience.

About Desentum Oy: Desentum is a biopharmaceutical company based in Espoo, Finland. It is specialized in developing a novel type of allergen immunotherapy based on switching the immune system’s response to allergens from hypersensitivity to tolerance by utilizing modified hypoallergens. Desentum, founded in 2011, is a spin-off company from VTT Technical Research Centre of Finland Ltd. In 2013 VTT received an EARTO (European Association of Research and Technology Organisations) Innovation Prize for the work behind the immunotherapeutic products. In 2018, Desentum was awarded a 1,9 M€ grant from the highly competitive Horizon 2020 SME instrument for the first-in-human clinical trial and business development.

Contact:

Pekka Mattila, CEO
Desentum Oy
Tel. +358-500-512934
[email protected]
www.desentum.com

Overview of the Controversial Modern Monetary Theory

Few theories have caused so many discussions as the Modern monetary theory (or MMT), which has been popularized by the leftmost sector of the Democratic Party, US, when it recurred to it to defend the huge expenses of the federal government on an attempt to detoxify the country from the fossil fuels and to finance a Medicare coverage for all.  

The re-birth of the Modern Monetary Theory  

MMT was created in the 1970s by the American economist Warren Mosler and shows similarities with older schools like Chartalism and Functional Finance. It was congresswoman and activist Alexandria Ocasio-Cortez who brought the debate to the table. In January 2019, she claimed that the government should implement Modern Monetary Theory to finance the Green New-Deal, applying political measures similar to those of the 1930s to augment the expenses but for ecologic reasons. In a public interview, she expressed that MMT should “be a larger part of the conversation.”

The approach

Despite the complexity and debate around MMT, there are some basic concepts shared by most of its adepts. The fundamental idea is that since the abandonment of the gold standard, a sovereign estate can print as much money as needed to finance public expenses and inject money into the economy, which they later withdraw in taxes.  They sustain that governments cannot go broke, as they can always create more money to pay off debts.

According to MMT theorists, we have been misled to think that substantial government debt is followed by financial collapse. Moreover, they state that if the spending creates deficit, it isn’t a real problem, as the national deficit is, in fact, the private sector’s surplus.

Modern Monetary Theory and inflation

Mainstream economists argue that it is ridiculous to think that central banks can finance massive spending without causing high inflation or even hyperinflation. Modern Monetary Theory, on the other side, reckons that there is a direct relationship between the circulation quantity of money and the level of prices. Yet, although they recognize the risk of inflation, they see it as a constraint that will keep decision-makers honest. Inflation is perceived as a result of real resource limits, and the Congress should set the spending, tax, and industry policies to keep inflation under control.

Restrictions on Modern monetary theory

Modern Monetary Theory advocates state that governments don´t have a budget constraint, and the only limit they have is the availability of real resources, like supplies and workers. If government spending is excessive in relation to the available resources, inflation could occur; therefore, the importance of proper policies.

It´s undeniable that Modern Monetary Theory keeps gaining attention and adepts, especially in the progressive political sectors. However, they haven´t provided a convincing response to the inherent problem of inflation yet.

Few theories have caused so many discussions as the Modern monetary theory (or MMT), which has been popularized by the leftmost sector of the Democratic Party

Is Modern Monetary Theory the panacea that will solve the world´s woes? Or is MMT just a new buzzword that keeps rising popularity? Implementing it would be a bold, risky experiment with no point of return or the miracle-solution we all crave for?

Could cryptocurrency and blockchain technology be the saviour?

Understanding Blockchain Technology

Blockchain technology finds its origin in the digital coin named Bitcoin. It was invented primarily to sustain it. Although blockchain is tightly associated with Bitcoin and other cryptocurrencies, these are just the top of the iceberg.

Blockchain technology finds its origin in the digital coin named Bitcoin. It was invented primarily to sustain it

Currently, blockchain technology is being used in other commercial applications, and annual growth of 51% is expected for 2022 in several markets, including financial institutions and Internet of Things (IoT).

What is blockchain technology, and what makes it secure?

A blockchain is a list of digital records or blocks of data that are stored in a linear chain that is constantly growing. It´s a kind of digital general ledger than can be shared with many users and that keeps record of every transaction. Each block contains encrypted data, for instance of a Bitcoin transaction, and is linked to the specific user that made it. There´s no way to alter the data in them since they are time-stamped and connected to the previous block.

The security of blockchain relies on the fact that it can be updated only with the agreement of all the participants and the system itself. 

The information of the whole chain is kept in each node, so each participant has an exact copy of the entire chain. If someone wanted to attack the service, he should overturn or nullify every node in the net given that just one operative node is enough for all the information to be available. 

As new records are created, these are verified and validated by the nodes and added to a new block that is linked to the chain. Once added, this block becomes unalterable. For a transaction to be accepted and added, some specific digital signatures or requirements must be met. For example, people that use the crypto-currency Ethereum, must meet several conditions to demonstrate that they have that crypto-currency and can operate with it. 

Why is blockchain useful for?

As it is a peer-to-peer network, where transactions are time-stamped, and that enables managing all the information exchange among the users in an autonomous way, without the need for an administrator, it is an excellent tool for all types of businesses. Any information that needs to be kept intact and available can be safely stored in a blockchain. 

Many industries, such as transport, fintech, and sanitary services, to mention just a few, are taking advantage of this technology that streamlines processes, improving productivity. 

Challenges organizations or companies could face with blockchain

Thanks to blockchain, the operative models and business-making models of the companies and organizations could undergo a total transformation with the adoption of blockchain technology. Many organizations are using blockchain technology for their transactions. Still, if it were massively adopted, one of the challenges that governments of extremely controlled sectors will have to solve is the lack of regulation.

Blockchain is complex, and it takes a longer time to process any transaction. It can take hours to complete a transaction. And the more it grows, the slower it gets. This could be an obstacle for specific industries.

Despite the above, the biggest challenge that blockchain technology faces is the reluctance of private and public sectors, along with the skepticism of the potential users who, as with each new technology, need time to learn, get used, and trust.  

See also about Modern Monetary Theory and Internet of People – IoP

Financial Reporting – A sketch of a Firm’s status | Ways and Uses of Report

Financial reporting refers to the exposure of the company’s finance to the stakeholders. These stakeholders are creditors, investors, the public, etc. The company’s finance report shows taxes, costs, and profits after a definite period. For this reason, you come to know the health of a firm. It does not offer more insight, though, but it is vital for a company’s success.

The main parts of a financial report are:

  • The final statements
  • Notes to financial statements
  • Quarterly and Annual Reports (listed company)
  • Prospectus
  • Management Discussion and Analysis (Public Company)
Financial reporting refers to the exposure of the company's finance to the stakeholders. These stakeholders are creditors, investors, the public, etc.

Ways of Financial Reporting

There are three ways to make financial reports:

The GAAP: GAAP is the set of book-keeping rules, and in the USA, SEC follows it. This system makes sure that the report is clear.

The IFRS: More than 110 countries use this system. The countries include Canada, China, and many others.

This system gives a global voice to business matters. Therefore they become easy to read internationally.

The GDPR: This system has a new set of rules and started on May 25, 2018. The new rules give safety to a person’s private matters.

Also, it assures that financial reports must compliant when they got sensitive data.

Financial reporting refers to the exposure of the company's finance to the stakeholders. These stakeholders are creditors, investors, the public, etc.

Uses of Financial Reporting

Financial Reporting is the need for every firm, and the stakeholders want it for many reasons. Let us see the benefits of financial reports:

Decision Making: Financial reports are a great tool to make decisions. They show all the changes that can affect the cash flow. So, you get to know how the firm collects the cash. You can make better decisions by analyzing the condition by the report.

Credit: Every business needs to lend money at any stage. So, with the help of the report, the creditor knows how much money you owe already. In short, financial reporting shows an actual image of a firm.

For Customers: It keeps the clients updated about the firm’s growth. Hence, it helps to build the client’s trust level.

Track Weakness: You can track any financial activity with the report. Thus, it helps you to tackle all potential defects by just a look. As a result, you can upgrade the health of your firm.

For Management: Financial reporting is helpful for management, as well. It can analyze the report and make better decisions for the company.

For Investors: As a report depicts the performance of a firm, the investors can make rational investment, credit, etc.

Company’s status: It helps to find where the company stands after a certain period. Hence, you find details about an increase in sales, market share, and profit.

Legal Demands: A company has to file a report to agencies like ROC, state, etc. So, financial reporting is useful in this respect.

Use of Resources: By report, the company manages the use of resources in the best way.

Verdict

In short, financial Reporting has all the reliable data about the firm. As a result, stakeholders can use the data for many plans. Also, financial reporting aids capital inflows and brings good competition.

See also: Financial Risks

Business Risks – Threats that nullify the company’s ability to meet its financial goals

The company has always exposed to uncertainties that are called business risks. They may affect a firm’s aim to gain its goals. The danger of loss is in the form of machinery breakdown, strikes, change of trends, etc.

Business risks refer to the threat to the company's ability to meet its financial goals. It indicates the risk of uncertainty or loss in profit and the risk of some eventuality in the future, which can make a business fail.

Factors Causing Business Risks

Business risks result in less profit or even loss. The factors that lead to risks can be Internal or External.

  1. Internal Business Risks: risks that arise due to some event happening within a firm are internal risks. However, the firm can control them. Internal risks occur by:
  • Technological factors
  • Human factors
  • Physical factors
  • Operational factors

Examples: New technology, fire, cost-cutting, etc.

  1. External Business Risks: External risks occur by any event happening outside the firm. However, the firm’s management cannot control them. The factors that lead to external risks are:
  • Natural factors
  • Economic factors
  • Political factors

Examples: Floods, price pressure, riots, etc.

Types of Business Risks

Risks have divided into five kinds:

  1. Strategic Risk: The risks associated with business operations are strategic risks. They arise when the business plans fail. Poor business decisions lead to failure, e.g., marketing risk, project risk, competitive risk, etc.
  2. Financial Risks: These risks related to business events and finance. It adds to shareholders by debt financing, along with equity.

For example, there can be losses by movement in stock prices, interest rates, etc.

  1. Operational Risks: These risks linked with official procedures of a business. There is a failure to connect to internal policies.

For example, some events like frauds, computer hacking, etc. affect a company’s daily activities

  1. Compliance Risks: Such risks occur by state rules and commands. When the company fails to follow laws, it has to face legal penalties. These risks ensure that the firm runs justly.

For example, corrupt practices, social responsibility, etc.

  1. Reputation Risks: The negative publicity of a firm/product leads to this risk. There is a chance that a company’s name can damage.

For example, a mobile company issues a phone that breaks easily. But then it markets a new and better model.

Business risks refer to the threat to the company's ability to meet its financial goals. It indicates the risk of uncertainty or loss in profit and the risk of some eventuality in the future, which can make a business fail.

Ways to Manage Business Risks

You can plan to manage the exposure of risks.

  • Mitigate the risk: You need to keep a contingency plan. In case if the risk materializes, you must have a second plan to follow.
  • Avoid the risk: It’s better to avoid than to bear a loss. Sometimes the launch of a product leads to affect the company financially. You can postpone it until your company stabilizes.
  • Transfer the risk: You can pass financial risks to someone else. For instance, fire insurance is the best example of it.
  • Accept the risk: If the risks are likely to happen, you can opt for small damage. So, examine the other option and make the right decision to accept the risk.

Business risks lead to uncertainties, but a good businessman takes them as a challenge. Risks lead to new clients and more sales. You can, however, manage to minimize the worst to happen.

See also about Financial Riska Management