Risk, uncertainty, and opportunity cost Flashcards
1
Q
What is risk?
A
The chance or possibility of an adverse occurrence
2
Q
What are the 2 types of risk?
A
Pure- an event beyond somebody’s control
Speculative- carries the possibility of gain as well as loss
3
Q
What is risk vs reward?
A
If a big risk is taken then there is a possibility that they will receive big reward
4
Q
What is misconception?
A
Big risks can lead to big reward NOT in interest to maximise risk
5
Q
Give examples of external uncertainty;
A
Political
Economic
Competition
6
Q
Give examples of internal uncertainty;
A
Technological
Stakeholders
Organisational and human resource uncertainty
7
Q
What is opportunity cost?
A
The next best alternative that has to be fortified when a decision is made
