1.1.2 Risk and Reward

• Creating value for customers is a key objective of entrepreneurship.

  True
• Match the type of risk with its description:

  Financial Risk ↔️ Risking capital to fund the business

  Market Risk ↔️ Uncertainty about customer demand

  Operational Risk ↔️ Risks related to day-to-day operations

  Reputational Risk ↔️ Risks to brand perception
• Launching a new product with limited market research is an example of market risk.
• Order the levels of risk and their corresponding potential rewards from lowest to highest:

  1️⃣ Low risk, modest returns

  2️⃣ Medium risk, revenue growth

  3️⃣ High risk, wealth creation
• Entrepreneurship is the process of identifying opportunities, gathering resources, and taking calculated risks
• What type of risk involves risking personal or borrowed capital?

  Financial risk
• Identifying and managing risks is crucial for business success.


  True
• Why are entrepreneurs willing to take on the risks of starting a business?

  Potential for high rewards
• What can understanding and managing risks lead to in entrepreneurship?

  Significant rewards
• SWOT analysis can help entrepreneurs identify and mitigate potential risks.


  True
• The first step in entrepreneurship is identifying opportunities in the market
• What role does risk play in entrepreneurship?

  Fundamental
• Successful entrepreneurs avoid all types of risks to ensure business stability.

  False
• Non-financial rewards include personal satisfaction and the ability to pursue one's passion
• Investing in a disruptive technology is an example of a high-risk, high-reward decision.


  True
• Risk is a fundamental aspect of entrepreneurship.


  True
• Match the risk type with its example:

  Financial Risk ↔️ Taking out a loan to start a coffee shop

  Market Risk ↔️ Launching a product with limited research

  Operational Risk ↔️ Relying on a single supplier

  Reputational Risk ↔️ Negative customer reviews
• Financial rewards include profits, wealth creation, and financial security
• Order the potential rewards based on risk level, from lowest to highest:

  1️⃣ Modest returns and stable profits

  2️⃣ Significant revenue growth

  3️⃣ Substantial wealth creation and market leadership
• Entrepreneurs can analyze risk using tools like SWOT or risk assessment
• What is the process of entrepreneurship primarily focused on?

  Creating value and profit
• Steps in the process of entrepreneurship

  1️⃣ Identifying opportunities

  2️⃣ Gathering resources

  3️⃣ Taking calculated risks

  4️⃣ Creating value and profit
• What is the purpose of taking calculated risks in entrepreneurship?

  Maximize business success
• What is the primary reward for entrepreneurs who take calculated risks?

  Potential payoff
• What happens to the potential reward as the risk level increases?

  Increases
• What is the fourth step in the process of entrepreneurship as defined in the material?

  Creating value
• Taking calculated risks helps entrepreneurs seize opportunities and innovate, leading to potential profits
• What are the two main types of rewards entrepreneurs can earn?

  Financial and non-financial
• Higher risks are generally associated with greater rewards in entrepreneurship.


  True
• Match the risk type with its potential reward:

  Financial Risk ↔️ High revenue, market share

  Market Risk ↔️ Customer loyalty, profitability

  Operational Risk ↔️ Efficiency, reduced costs

  Reputational Risk ↔️ Positive brand image, customer trust