Describe the sources of business risk

What will be an ideal response?

Four basic determinants of a firm's business risk:
The stability of the domestic economy. Firms that operate in more volatile economies, such as those of developing
nations, are subject to swings in revenue that are much more severe than those experienced by firms that operate
within developed countries.
The exposure to, and stability of, foreign economies. In today's global economy, more and more firms produce and sell
their products in multiple countries. This means that it is not only the natural volatility of the firm's home country that
drives the volatility of the firm's revenues but also that of the countries in which its goods and services are produced
and sold.
Sensitivity to the business cycle. Some industries are more sensitive to the business cycle than others. For example, the
sales of consumer durable goods such as automobiles, housing, and appliances tend to be more sensitive to swings in
the business cycle than the sales of necessities such as food and clothing.
Competitive pressures in the firm's industry. Here we refer to the forces of other firms within the firm's marketplace
that provide the same (or close substitute) products and services. Greater competitive pressures will force the firm to
make price concessions sooner and deeper than would otherwise be the case.