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Chapter 1
Why incur risk?
2.1 Reasons why companies take risks
To increase financial return – It is generally the case that firms must be willing
to take higher risks if they want to achieve higher returns.
To gain competitive advantage – 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.
4
