Entrepreneurship Risk in the Market Economy: Principles and Methods of Management

Bratoi Koprinarov

Economic Studies journal, 2005, issue 3, 86-102

Abstract: The modern economic risks, including the entrepreneurial risk, are the result of predominantly human decisions and actions, and not only in response to human imprudence and senselessness, but mostly due to human incapability to foresee the far-reaching effects of man’s technological and social protagonism. The new type of risk is a serially produced insecurity – a mixture of risk, greater knowledge, greater ignorance and reflectivity. Today’s business is unthinkable without risk, since success in business very often depends not only on the right choice of strategy, but also on discerning the probable critical situations. Thus the major concern of every entrepreneur is the ability to assess the degree of the risk and to govern it, not to escape from it. The structural changes caused by the economic liberalization, the global competition and the technologically entrapped markets lead to viewing risk management as the core of etrepreneurship. The better knowledge of the problems of risk, which every businessman and investor tends to face in market economy, as well as the goals to enhance the effectiveness of risk management, requires a wider application of the mechanisms and practical approaches to decrease the value of entrepreneurial risk. Achieving the goals in risk management demands the formation of a definite approach to minimize and do away with it. The efficient approach includes an estimate, choice and substantiation of the admissible risk which, methods to decrease it, forming variants for venture investments, estimation of their optimality on the basis of expected profit and size of risk.

JEL-codes: M13 (search for similar items in EconPapers)
Date: 2005
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