Risks are common for all firms, but there are different levels of risks in different industries and in different countries. The differences in risks from firm to firm or industry to industry are called unsystematic risks. Consequently, individual firms and industries deal with risks in different ways.
Consider two companies that deal in two entirely different industries, such as Microsoft, which is a technology company, and Caterpillar Inc., which manufactures heavy equipment.
Respond to the following questions:
- Explain how the risks and the approaches to anticipate these risks differ for each company.
- Analyze the kinds of risks that are most intimidating for each.