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Chapter 10
1.3 Why incur risk?
Incur risk?
Gain
Increase
competitive financial return
advantage
To generate higher returns a business may have to take more risk
in order to be competitive
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
intangible – better quality information.
In both cases, these will lead to the business being able to gain competitive
advantage
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