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:
(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.
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.