Through risk management you stomach doctor your possible financial losses caused by unsuccessful commonplace business operations. Its essential to contemplate the things which could go wrong at heart your business and to evaluate the financial cost to you if these events happen. Then you can seek to intelligently reduce your financial exposure caused by these events. Or, you can try to avoid the event entirely.
 Lets take a simple case. Suppose youve invented a new product, say a board game. Well call it Boardmania. One of the biggest risks is that the game just wont sell. If you retooled your manufacturing workings to produce one gazillion games per year and youre only exchange fifty games a year, you are in trouble. If you borrowed $5 million dollars to retool the plant, you are in more trouble. If this is your companys only product, you are in a whole heap of trouble!
 astronomic ceiling expenditures often represent big financial risk to small companies.
The danger is that the capital investment ordain non yield the desired return, increase in efficiency, cost savings, or future sales will not justify the capital investment. The only practical recovery method may be to sell the capital point, recouping what money you can.
 Physical depreciation or lack of market demand for the capital item could draw out to a substantial loss on the items sale. Thats assuming the item is sellable at all. In the case of retooling your plant, there may be substantial, capital costs which cannot be recovered.
 For example, the dies and molds to make the precise game pieces have little value to anyone not qualification your Boardmania game pieces. And, knowing how unprofitable Boardmania manufacture is, its unlikely anyone will want to produce them!
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