Risk Takers and Risk-Neutral Entrepreneurs - Coursework Example

In the entrepreneurial world, risk is categorized into three; risk-taker, risk-neutral, and risk-averse persons. All these exercise their activities in risky environments without necessarily taking into consideration the success or failure that the risk might bring forth.

Risk-taker A risk-taker is a type of entrepreneur who decides to involve oneself in a risky venture without necessarily taking into consideration the extent of the harm that the venture will cause. This type of entrepreneur is full of vigor and strength and is fully prepared to undergo all the necessary downfalls that are attached to the risk. A perfect example of this is an entrepreneur buying out a bond during an economic boom. In case of a chance of an economic downturn, the individual will incur a lot of risk and the net worth of his investments will be negative.   Risk-averse This is a type of investor who doesn’t like involving oneself in risky ventures. He knows and understands the possible outcome of indulging oneself in such activities. This does not guarantee success in any of his ventures. This type of individual prepares himself to take a risk in case of an option where risk is involved and there is no loophole for escape. He sets out steps to follow and possible procedures to take in case the risk binds him. 

Risk-neutral A risk-neutral person is neither a risk-taker nor a risk-averse entrepreneur; he operates comfortably in all environments and is fully prepared to face risk in case it binds him down. On the other hand, in case the risk doesn’t affect him, he emerges as a victor.

A risk-averse takes caution in everything that he, in case of taking risks to achieve success, and the risk-averse person does not comprehend. A risk-neutral entrepreneur operates comfortably in all environments.

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