ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Entrepreneurs face multiple risks such as bankruptcy, financial risk, competitive risks, environmental risks, reputational risks, and political and economic risks. Entrepreneurs must plan wisely in terms of budgeting and show investors that they are considering risks by creating a realistic business plan.

Detailed explanation-2: -Business risk is the exposure a company or organization has to factor(s) that will lower its profits or lead it to fail. Anything that threatens a company’s ability to achieve its financial goals is considered a business risk. There are many factors that can converge to create business risk.

Detailed explanation-3: -The most common reasons small businesses fail include a lack of capital or funding, retaining an inadequate management team, a faulty infrastructure or business model, and unsuccessful marketing initiatives.

Detailed explanation-4: -Innovation and opportunity are tied to risk Business leaders accept risk as a cost of opportunity and innovation. They know it cannot happen if you will not accept the risk that your undertaking might fail.

Detailed explanation-5: -Risk-taking enables and encourages innovation, which can be an important product/service differentiator. Failed risks aren’t always negative. Sometimes, they provide the most valuable business lessons an entrepreneur can learn. Failure helps shape future business strategies and can eventually lead to business growth.