Risk: Practice Questions

Which attitude towards risk is shown by an entrepreneur who is eager to take risks in the pursuit of potentially high rewards?

An entrepreneur is launching a new mobile app designed to help students manage their revision. Before investing heavily in full development, they release a 'minimum viable product' (MVP) to a small test group to gather feedback and make necessary adjustments. What attitude towards risk is this entrepreneur demonstrating?

A small, independent coffee shop operates in a popular tourist district. A large international coffee chain announces plans to open a new branch directly opposite the independent shop within the next six months. The independent owner decides to invest heavily in renovating their shop, introducing a new loyalty programme, and actively promoting their unique, locally sourced blend. What type of risk is the independent coffee shop primarily facing, and what risk management strategy is the owner adopting?

An entrepreneur is worried that a fire might break out in their factory, damaging equipment and putting staff in danger. According to the syllabus, which area of risk does this best describe?

A new restaurant owner decides to offer a limited, experimental menu initially to gather customer feedback before investing in a full, diverse menu. What attitude towards risk is the owner demonstrating?

State two different types of risks, other than financial, that an entrepreneur might face when starting a new business venture.

Describe how an entrepreneur might use a PEST analysis to identify a technological risk that could impact their enterprise.

Analyse the potential implications of a production risk, such as a major equipment failure, on both the financial and human resource areas of an enterprise.

A group of IGCSE Enterprise students, called "GreenHands", is planning to launch a small enterprise project to sell handcrafted reusable shopping bags made from recycled materials. Their aim is to promote environmental awareness and donate 20% of their profits to a local wildlife charity. They plan to sell these bags at school events and a local community fair.

a) Identify three different types of risks (e.g., financial, production, human resources, economic, health and safety/environmental) that the "GreenHands" enterprise project might face.

b) For two of the risks identified in part (a), explain the potential implications for the "GreenHands" enterprise if these risks are not managed effectively.

c) Propose a practical strategy to manage each of the two risks explained in part (b).

d) Discuss how a "risk-averse" attitude among the students might influence the choices they make when developing their enterprise project.