Commercial risk is a risk arising from the sale of goods and services produced or purchased by an entrepreneur
Commercial risks arise from the following main reasons:
- reduction in sales due to falling demand or demand for goods sold by an enterprise firm, displacement of its competing goods, imposition of restrictions on sales;
- increase the purchase price of goods during the business project;
- an unexpected reduction in the volume of purchases compared to the intended volume, which reduces the scale of the entire transaction and increases the cost per unit of volume of goods sold (through conditional constant costs);
- losses of goods;
- loss of quality of the goods during handling (transportation, storage), which leads to reduction of its price;
- higher conversion costs than expected as a result of fines, unforeseen duties and deductions, resulting in lower profits for the business firm.
Commercial risk includes:
- risk associated with the sale of goods (services) in the market;
- transport risk (transport)
- risk associated with acceptance of goods (services) by the buyer;
- risk related to the buyer 's solvency;
- risk of force majeur circumstances.
It should be noted that commercial risk is often equated with entrepreneurial risk, but commercial risk is one type of entrepreneurial risk.