Difference between revisions of "Introduction to entrepreneurship/IENT101/Nature/Risk"

Revision as of 20:43, 4 October 2018

Anyone thinking about starting a new business or venture of any kind needs to think about possible risks and reward.

• Risk can be defined as the chance of loss. Generally, the higher the risk, the higher the potential for loss. ^[1]

• A Reward is a positive incentive that makes people better off. ^[2]

There is usually a direct relationship between the risk of a loss and the expected rate of return. The higher the risk of loss, the greater the potential reward. Conversely, the lower the risk of loss, the lower the potential reward.

Web resources

Read these two short articles to learn more about risk and reward:

• Here's why the risk-reward model works so well inc.com, 14 October 2015
• 4 examples of risks leading to reward entrepreneur.com, 21 March 2015

References

1. ↑ www.stlouisfed.org/education_resources.
2. ↑ www.stlouisfed.org/education_resources.