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

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	Anyone thinking about starting a new business or venture of any kind needs to think about possible risks and reward.		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. <ref>www.stlouisfed.org/education_resources.</ref>
−	* A Reward is a positive incentive that makes people better off. <ref>www.stlouisfed.org/education_resources.</ref>	+	There are two elements to risk assessment: The likelihood that the bad thing will happen and the impact if the bad thing does happen.
−	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.	+	A reward is an incentive - it ''may'' be financial, but doesn't have to be. It could be positive feedback, customer loyalty, reputation, and so on.
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Latest revision as of 21:15, 16 October 2018

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

There are two elements to risk assessment: The likelihood that the bad thing will happen and the impact if the bad thing does happen.

A reward is an incentive - it may be financial, but doesn't have to be. It could be positive feedback, customer loyalty, reputation, and so on.

WEnote

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