Final answer:
Operating risk refers to the level of uncertainty and potential losses that a company may face in its day-to-day operations. It is influenced by factors such as competition, market conditions, regulatory changes, and the nature of the company's business. To determine which company has the most operating risk, one must consider various factors such as the industry in which the companies operate, their financial health, and the volatility of their revenues and expenses.
Step-by-step explanation:
Operating risk refers to the level of uncertainty and potential losses that a company may face in its day-to-day operations. It is influenced by factors such as competition, market conditions, regulatory changes, and the nature of the company's business.
To determine which company has the most operating risk, one must consider various factors such as the industry in which the companies operate, their financial health, and the volatility of their revenues and expenses.
For example, a company operating in a highly competitive industry with thin profit margins and little diversification is likely to have higher operating risk compared to a company operating in a less competitive industry with higher profit margins and more diversification.