What risks can the following fixed assets be exposed to and what can the business do to prevent or compensate for them? Quantify the risk in terms of probability and severity:

Question

(9)

Fixed asset

Risk(s): Probability and severity

Building

Fur Thoff

Computers

Virged

Stolen Empowers unelle to use computers

Vehicle

Stolra

Froud

Prevention

(5)

Activity 8

Define depreciation, say why it is an important aspect of a busines financial planning and give two examples from your business unit.

Answer 1

Fixed asset: Building

Risk: Fire

Probability: Medium

Severity: High

Prevention: Install fire alarm systems, regularly inspect and maintain electrical wiring, and have fire extinguishers readily available.

Fixed asset: Computers

Risk: Cyber attacks

Probability: High

Severity: Medium

Prevention: Install antivirus software, conduct regular security audits, and provide staff training on cybersecurity best practices.

Fixed asset: Vehicle

Risk: Accidents

Probability: Medium

Severity: Medium

Prevention: Regular maintenance and servicing, driver training and monitoring, and having insurance coverage for accidents.

Depreciation is the decrease in value of a fixed asset over time due to wear and tear, obsolescence, or other factors. It is an important aspect of a business's financial planning as it allows for the accurate calculation of the true value of the assets owned by the business, as well as proper allocation of expenses over the useful life of the asset.

Two examples of depreciation from a business unit could be the depreciation of machinery used in production and the depreciation of office equipment such as computers and furniture.