Defining the concept of risk applied in entrepreneurship. Conceptual delimitation risk - entrepreneurial uncertainty

• Main Authors: Andrei Alexandru TĂRĂBÎC, Gabriel MORAR
• Format: Article
• Language: English
• Published: General Association of Economists from Romania 2019-03-01
• Series: Theoretical and Applied Economics
• Subjects: entrepreneur; risk; uncertainty; sme's
• Online Access: http://store.ectap.ro/suplimente/International_Finance_and_Banking_Conference_FIBA_2019_XVII.pdf#page=39

Even though in many cases the terms of risk and uncertainty are similar, but they have to be delimited to understand the meaning of each individual as accurately as possible. The two terms are combined in different situations. No matter how well the risk is managed, uncertainty can not be removed because all possible situations and interdependencies can not be taken into account. Thus, a source of risk can be considered uncertainty in itself if it is based on poor quality information about the actual internal or external situation of the company. Also, in my conclusion, traditional financial theory distinguishes between systematic risk and the particular risk, which reaches the company\’s overall risk. Investors can reduce total risk with the two primary risk management instruments, namely diversification and asset allocation.