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Outline two non-insurable risks faced by entrepreneurs - Leaving Cert Economics - Question 1 - 2009
Question 1
Outline two non-insurable risks faced by entrepreneurs. (i) (ii) (16 marks)
Worked Solution & Example Answer:Outline two non-insurable risks faced by entrepreneurs - Leaving Cert Economics - Question 1 - 2009
Step 1
Loss of profits due to falling demand
Answer
One significant risk that entrepreneurs face is the loss of profits stemming from a decline in demand for their products or services. This situation can arise due to various factors, such as economic downturns, shifts in consumer preferences, or the emergence of substitute products. As consumer interest wanes, businesses may experience dwindling sales, leading to decreased revenue and potential financial instability.
Step 2
Poor decision-making / poor management
Answer
Another critical non-insurable risk is poor decision-making or ineffective management practices. Entrepreneurs are often faced with numerous strategic choices, and a miscalculated decision can result in severe consequences for the business. This includes financial losses, damage to the company’s reputation, and even operational failures. Effective management is crucial for navigating challenges and capitalizing on opportunities in the market.