Lesson 2.7.1

2.7.1 Risk and uncertainty Quiz: OCR Business, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 2.7.1, Risk and uncertainty: 20 multiple choice questions for the OCR Business (H431), Unit 2: Business objectives and strategy, written with Revision Ninja.

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The 20 questions

  1. How does risk differ from uncertainty in business decision-making?

    • Probabilities are known
    • Costs are zero
    • Outcomes are certain
    • Losses are avoided

  2. What is the primary purpose of a business contingency plan?

    • Maximising daily profit
    • Setting staff wages
    • Preparing for crisis
    • Reducing tax liabilities

  3. An outcome has a 60% chance of £100,000 profit and 40% chance of £0. Expected value is?

    • £60,000
    • £40,000
    • £50,000
    • £100,000

  4. Which technique assesses the impact of changing one key variable on financial outcomes?

    • Variance analysis
    • Ratio analysis
    • Sensitivity analysis
    • Break-even analysis

  5. Which of the following represents an unquantifiable risk for a business?

    • Standard delivery delays
    • Bad debt allowance
    • Sudden political upheaval
    • Historical machine failure

  6. A firm buys insurance against flood damage. Which risk strategy is being used?

    • Risk acceptance
    • Risk transfer
    • Risk elimination
    • Risk avoidance

  7. What do square nodes represent in a business decision tree diagram?

    • Chance outcomes
    • Expected values
    • Final payoffs
    • Decision points

  8. What do circular nodes represent in a business decision tree diagram?

    • Chance events
    • Cost totals
    • Strategic goals
    • Decision points

  9. A project has an expected value of £80,000 and costs £30,000. What is the net gain?

    • £110,000
    • £80,000
    • £30,000
    • £50,000

  10. What is a major limitation of using decision trees for strategic planning?

    • Ignored qualitative factors
    • Guaranteed profits
    • No numerical data
    • Includes all variables

  11. A UK exporter fixes exchange rates in advance. What risk mitigation method is this?

    • Trade protectionism
    • Asset stripping
    • Market penetration
    • Financial hedging

  12. Which risk category includes equipment failure and employee errors within a firm?

    • Strategic risk
    • Compliance risk
    • Systemic risk
    • Operational risk

  13. A business fails because a competitor launches superior technology. What risk was this?

    • Compliance risk
    • Strategic risk
    • Liquidity risk
    • Operational risk

  14. Which attitude to risk describes a board comfortable taking major risks for high returns?

    • Risk-seeking
    • Risk-averse
    • Risk-neutral
    • Risk-passive

  15. Why do businesses plot risks on a matrix of probability and impact?

    • Reducing tax obligations
    • Calculating precise profit
    • Eliminating all risks
    • Prioritising risk responses

  16. A company enters three unrelated markets to spread commercial risk. What strategy is this?

    • Cost leadership
    • Market penetration
    • Diversification
    • Vertical integration

  17. What term describes an extremely rare, high-impact event that is difficult to predict?

    • Grey Rhino event
    • Red Herring event
    • Blue Ocean event
    • Black Swan event

  18. An option has a 70% chance of £50m profit and 30% chance of £10m loss. Expected value is?

    • £32m
    • £40m
    • £35m
    • £38m

  19. A new tax law reduces a manufacturer's profits. What category of risk is this?

    • Financial risk
    • Compliance risk
    • Operational risk
    • Internal risk

  20. Which document outlines procedures to keep critical functions running during a crisis?

    • Business continuity plan
    • Income statement
    • Annual report
    • Marketing plan

All OCR Business quizzes