Entrepreneurship and Small Business (ESB) Certification Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Entrepreneurship and Small Business Exam with quizzes, flashcards, and detailed question explanations. Sharpen your knowledge and skills to excel in your certification journey!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

An example of an ____ risk is a natural disaster.

environmental
operational
financial
market

The correct answer is: environmental

The correct choice is environmental. Natural disasters such as hurricanes, earthquakes, floods, and wildfires fall under environmental risks because they stem from changes in the natural environment that can disrupt business operations. These events can lead to physical damage to property, infrastructure, and resources, resulting in significant financial losses and operational challenges for a business. Operational risks deal with internal processes, systems, or external events that can affect the day-to-day functions of a company. While natural disasters can indeed impact operations, they are classified more specifically as environmental risks due to their origin and broader implications. Financial risks typically relate to market fluctuations, credit risks, or issues linked with a company's financial health and funding. They do not align with the nature of natural disasters. Market risks concern changes in consumer demand or market conditions that affect a business's performance. Again, while market uncertainties can impact a business, they are not tied to the unpredictable events classified as natural disasters. In summary, when identifying risks, understanding the context is crucial; environmental risks directly relate to incidents in the physical environment, such as natural disasters, making it the most accurate classification in this instance.