IBUS3102 Study Guide - Final Guide: Worst-Case Scenario Series, Southwest Airlines, Natural Disaster
24 Jul 2018
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Document Summary
Environmental and extreme uncertainties are typically characterised by: Natural disasters: difficult to predict and control: e. g. Stealth disasters: man made can trace origin to person or behaviour, two categories: sudden onset e. g. bp oil spill in gulf of mexico, gradual onset e. g. climate change. Most common is purchasing insurance to manage that sort of risk exposure. But because this risk is so hard to grasp, insurance is an expensive way to manage risk. Domino effect our behaviour climate change increased social costs to behaviour. A negative externality imposes an external cost and. Positive externalities that are created include knowledge transfer, improvement in infrastructure (roads, transport), increased levels of investment from similar companies" competition, other local businesses e. g. restaurants, housing, entertainment etc. will now have a market generated from this new business. An external cost of production is a cost that is not borne by the producer but is borne by others.
