Entrepreneurial Risk

Define ‘entrepreneurial risk’

Entrepreneurial risk is the necessary risk associated with any new business venture or opportunity. It is most clearly seen in entrepreneurial business activity, hence its name. In ‘Ansoff’ terms, entrepreneurial risk is expressed in terms of the unknowns of the market/customer reception of a new venture or of product uncertainties, for example product design, construction, etc.


There is also entrepreneurial risk in uncertainties concerning the competences and skills of the entrepreneurs themselves.


Entrepreneurial risk is necessary because it is from taking these risks that business opportunities arise. The fact that the opportunity may not be as hoped does not mean it should not be pursued. Any new product, new market development or new activity is a potential source of entrepreneurial risk but these are also the sources of future revenue streams and hence growth in company value.



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