CEVAP:

There are many factor explainin it but the main factors are listed below:

• Shifts in the demand for the products/ services of the company. Higher volatility of demand for the products/services of the firm escalates the business risk.
• Fluctuations in thesales price dueto market volatility. Firms operating in markets with
high output price variations are prone to higher business risk.
• Changes in input costs. Uncertainty and excessive volatility in input costs raise the
business risk.

• The cost structure of the company, especially the level of the fixed costs in total
costs which are measured by the degreeof-operating leverage (DOL). If the DOL
is high, the firm will be exposed to higher business risk.
• The ability to adapt cost-effective measures to changes in both the input costs and
output prices. Some firms can quickly implement cost-effective processes to adjust
to the fluctuations in input costs or output prices. This ability reduces the business risk
faced by the company.