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If law and order is weak in an area, what will be the effect on business operations?

Answer and explanation

Correct answer: Operational risk will increase

The direct answer is A: operational risk will increase. Law and order means the level of safety, security and enforcement in an area. If it is weak, theft, violence, disruption, delayed transport, damage to property or difficulty in enforcing contracts may become more likely. Step by step, insecurity interrupts movement and work; interruptions can delay production and distribution; delays and losses increase business risk and may raise costs. Option A is correct because daily operations become less reliable and less safe. Option B is wrong because weak law and order cannot fix or determine customer income. Option C is wrong because insecurity does not improve production technology; it may instead prevent its proper use. Option D is wrong because no business situation makes all costs disappear, and weak law and order can create extra costs. The effect may differ in degree, but increased operational risk is the sound general conclusion. Exam cue: connect law and order with security, continuity, transport and political risk.

Related tags

Business-EnvironmentPolitical-EnvironmentClass-12Medium

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