Jonny and Paul is a small firm providing advice on all aspects of personal finance.
Their industry is heavily regulated so, being a small firm, the costs of regulation can be a very heavy burden.
A newspaper article predicts that a further area of the firm’s current business, private medical insurance, may be subjected to brand new regulatory requirements from next year.
This possibility is an example of?
Select ONE answer:
- Level of exposure and probability of occurrence
- Potential loss and probability of occurrence
- Potential loss and level of volatility
- Level of exposure and level of volatility
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 3
- Not correct
- Not correct
- Correct == > This is clearly a regulatory (or legal) risk, which is a form of event risk.
- Not correct
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