EduPub, a small educational publishing company, is struggling to keep up with its competitors and continue to grow its earnings. This company is finding that new players and technology are changing the landscape for the entire publishing industry, and its poor management and lack of forward planning is causing it to fall behind the curve. Which type of risk does this scenario best describe?
A) liquidity risk
B) currency risk
C) financial risk
D) operating risk
E) business risk

Question

Quizplus · Accepted Answer

This scenario describes business risk, which is related to the inability of a firm to hold its competitive position and maintain stability and growth in earnings. Business risk occurs because the company does not keep up with its competitors due to lack of research and development, lack of forward planning, and poor management. New players and new technology can change the landscape for the whole industry, and the risk is that any company can be left behind.

EduPub, a Small Educational Publishing Company, Is Struggling to Keep