Entrepreneurial risk is, first of all, responsibility

Production and commercial activities always carry certain risks. Of course, the manager, the entrepreneur is responsible for the decisions made. Therefore, it is always necessary to take into account the savings of financial and material resources. Very carefully, you should conduct calculations for projects and transactions. This rule is especially relevant during the financial crisis, high inflation, large loans.

Entrepreneurial risk is ...

In case of errors in calculations, management decisions, the developed projects do not bring profit, on the contrary, the company incurs losses. This result of activity is entrepreneurial risk. It can be divided into three components: investment, financial and production.

Entrepreneurial risk is an error whose consequences are expressed:

• In the full stop of the enterprise;
• Non-receipt of raw materials, materials for production;
• In the risk of unrealization or incomplete sales of manufactured products (unclaimed services);
• Untimely or complete non-receipt of funds from product sellers;
• In the risk of return of manufactured and sold products;
• In the risk of non-compliance with credit, investment and loan agreements;
• In the bankruptcy of both the institution itself, the company, the firm, and its partners, Suppliers.

Types of entrepreneurial risks

The classics of fundamental science are based on a set of characteristics. But entrepreneurial risk is a concept requiring as precise a definition of its species as possible. Therefore, it is considered to be three types of risks. They include:

1. entrepreneurial;
2. Creditor;
3. monetary.

Entrepreneurial risk is the danger of the emergence of circumstances that terminate the work of an enterprise if personal funds (finances) are invested.

Lender's risk is the risk of non-return of borrowed funds. Such a situation can arise as a result of the borrower's bankruptcy, both intentional and involuntary.

Monetary risk is the risk of depreciation of the money supply. That is, it is always more profitable to lend tangible assets.

Entrepreneurial risk is a direct dependence of the amount of profit. For example, buying short-term bonds, do not expect a rapid increase in capital. On the contrary, a common stock, which has the smallest degree of security, is highly capitalized.

Area of entrepreneurial risk

In order to develop ways of getting out of bankruptcy to some extent, to manage business risks, it is necessary to understand in which area of risk the enterprise is located. They are usually divided into four main ones:

1. Risk-free;
2. Acceptable risk;
3. Crisis;
4. Catastrophe.

The first area is characterized by the absence of losses, operations bring normative profits, there is no borrowed capital.

The second area assumes that the losses are tolerant compared to the profit, the company's activity remains appropriate both in the market and in the financial sense.

Third, the expected losses exceed the potential profit. Entrepreneurial activity leads to bankruptcy.

Area of the catastrophe. The name speaks for itself. Losses exceed the crisis level and constitute the value of the enterprise itself.