An entrepreneur keeps backup funds in a savings account so that if their business experiences a loss, they will be able to recuperate. what type of risk management is this an example of?

An entrepreneur keeps backup funds in a savings account so that if their business experiences a loss, they will be able to recuperate. This is an example of financial risk management in which the entrepreneur tries to reduce the risk.

Further Explanation:

Entrepreneur:

Entrepreneur is a person who alone can start his business. He is the only owner of his business. He does not have any partnerships with other people. He takes all the losses in the business. He also earns all the profit asan entrepreneur. The successful entrepreneur is those who have the ability of leadership and risk management.

Financial risk is a type of risk loss in which the business is going to lose due to cash shortage. The entrepreneur puts backup funds to meet future losses in the business. Risk management refers to the process in which the entrepreneur manages the risk that may be occurred. This is an example of risk-reducing, as an entrepreneur maintains a savings account if the business faces a loss. The loss can be set off by the savings money available in bank balance. Backup funds are those funds which entrepreneur maintain to meet the unexpected expenses and losses occurred in the business.

Learn more:

1.Learn more about portfolio

2.Learn more about a savings account

3.Learn more about profit margin

Answer details:

Grade: Middle School

Subject: Business

Chapter: Entrepreneurship

Keywords: An entrepreneur, keeps backup funds, savings account,business, experiences a loss, able, recuperate, type of risk management, an example, financial risk, reduce risk, earns profit, shortage, own business.