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What are Business Risks
Business Risks is a collective term for all risks that fundamentally affect the business, or have an influence in decision-making of entrepreneur or top management of the organization.

Business Risks is a collective term for all risks that fundamentally affect the business, or have an influence in decision making of the entrepreneur or top management of the organization. Entrepreneurship brings a number of risks. In the first place it is a decision making process itself (how to run a business, in what to do a business, where to do a business), decision about establishment of the enterprise (establishment of a company) and during a entrepreneurship a wide range of decisions on the development and introduction of new products or services on the market.

Business risks in practice: Entrepreneurship is highly risky. Decisions about business and finance of the development and introduction of new products are the biggest business risks - in case of failure the expenditure is lost (so-called sunk costs), and in case of success, on the other hand, the enterprise (entrepreneur) has a big profit - which compensates the risk. Business risk is even greater if foreign capital for the new product development is used (an entrepreneur runs the risk of debt that must be paid back).

A well-drawn up business plan, information about the organization and market situation help reduce business risks. Intuition and other abilities of the entrepreneur or manager are also important during the execution of business plan. Insurance is used in practice to reduce the financial impact of business risks.

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Last update: 16.10.2015

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