risk and reward

• impact of risk and reward on business activity

  • The impact of risk and reward on business activity is significant
  • They are two sides of the same coin in business
  • Businesses must manage the risks associated with failure, financial loss, and lack of security while striving to achieve the rewards of success, profit, and independence
• the risks of business activity (business failure)

  • Business failure affects businesses of all sizes and is a risk to both new and established businesses
  • It occurs when a business is unable to meet its financial obligations or when it cannot generate enough revenue to sustain its operations
  • The impact of business failure can be devastating, resulting in job losses, bankruptcy, and financial ruin for the owners and investors
• the risks of business activity (financial loss)

  • This occurs due to factors such as poor financial management, economic downturns, or unexpected events such as natural disasters
  • The impact of financial loss can be severe, resulting in reduced profitability, reduced competitiveness, and reduced ability to invest in growth
• the risks of business activity (lack of security)

  • This is a risk that businesses face in terms of data security, intellectual property theft, or physical security
  • A security breach can result in reputational damage, legal liability, and the loss of customer trust
• • There are many ways in which entrepreneurs can reduce the risks associated with starting up and running a business including 
  • Careful management of cash flows into and out of the business
  • Conducting thorough market research before and during trading
  • Setting clear aims and objectives 
• The rewards of business activity (business success)

  • This is the ultimate reward that business owners strive for
  • It occurs when a business meets or exceeds its objectives, such as generating revenue, achieving profitability, or expanding its operations
• the rewards of business activities (profit)

  • Profit is a measure of the success of a business
  • Profit enables businesses to reinvest in growth opportunities, pay dividends to shareholders, and provide financial stability to the business
• the rewards of business activity (independence)

  • This reward is often overlooked but is crucial to the success of a business
  • Independence allows businesses to make their own decisions rather than being subject to the demands of external stakeholders such as investors or creditors