Why Take Risk?
If business do not take risk, business will not going to sustain. Business have to take calculated risk.
It’s not possible to totally avoid risks. Business should try to convert the risk into opportunity.
Everything we learn in life and business is from our risks and experiences.
There are some benefits also of risk which are shown below,
A risk can be defined as an unrealised future loss arising from a present action or inaction.
Risks are the opportunities and dangers associated with uncertain future events.
Risks can have an adverse (‘downside exposure’) or favourable impact (‘upside potential’) on the organisation’s objectives.
Why incur risk?
– To generate higher returns a business may have to take more risk in order to be competitive.
– Conversely, not accepting risk tends to make a business less dynamic, and implies a ‘follow the leader’ strategy.
– Incurring risk also implies that the returns from different activities will be higher – ‘benefit’ being the return for accepting risk.
– Benefits can be financial – decreased costs, or intangible – better quality information.
– In both cases, these will lead to the business being able to gain competitive advantage.
The mobile phone operator may find a way of easily amending mobile phones to make them safer regarding the electrical emissions generated. Given that customers are concerned about this element of mobile phone use, there is significant potential to obtain competitive advantage.
A new type of mobile phone providing, say, GPS features for use while travelling, may provide significant competitive advantage for the company; the risk of investing in the phone is worthwhile in terms of the benefit that could be achieved.
