risk bearing

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Having or sharing responsibility for accepting the losses if projects go wrong. Most economic activities are capable of resulting in losses under some circumstances, however good the expected results may be. Somebody has to bear the risk of meeting any losses. The first risk bearer for any project is the entrepreneur in a private firm, or the equity shareholders in a company. If the losses are sufficiently bad, other people connected with a firm are also at risk, including creditors, the tax authorities, customers who have paid deposits on goods, and workers left unpaid when a business collapses.

Subjects: Economics.

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