Syllabus: Pearson Edexcel GCSE Business
Module: Enterprise and Entrepreneurship
Lesson: 1.1.2 Risk and Reward

Introduction

The topic “1.1.2 Risk and reward” sits at the heart of the Pearson Edexcel GCSE Business specification within Theme 1: Investigating Small Business. It introduces learners to the critical relationship between risk-taking and entrepreneurship, laying the foundation for understanding business dynamics. Aligned with the assessment objectives of AO1 (knowledge), AO2 (application), and AO3 (analysis), this topic helps students explore how and why entrepreneurs take calculated risks, and what potential rewards or setbacks they may face as a result.

Whether you’re a classroom teacher building out a medium-term plan, an SLT member auditing curriculum coverage, a careers lead embedding Gatsby Benchmarks, or a headteacher ensuring curriculum breadth and real-world relevance, this unit offers clear value in developing enterprise literacy and employability mindsets.

Key Concepts

According to the Pearson Edexcel specification, learners should understand:

• The concept of risk in business: including what makes starting and running a business inherently risky.

• Common business risks: such as business failure, financial loss, and lack of security.

• Rewards for enterprise: such as business success, profit, independence, and personal satisfaction.

• The relationship between risk and reward: recognising how entrepreneurs balance potential benefits with possible losses when making business decisions.

The emphasis is not just on memorising definitions but on applying them to real-life contexts and being able to evaluate business decisions in light of these factors.

Real-World Relevance

Risk and reward are more than textbook terms – they’re lived realities for business owners and budding entrepreneurs. Recent examples include:

• Gymshark’s founder Ben Francis, who left university to launch a brand from his garage. His early risk – dropping out of education – led to a £1 billion brand, but not without financial and operational challenges along the way.

• UK start-ups during COVID recovery: Despite economic uncertainty, over 800,000 businesses were started in 2021 alone, with many founders chasing the reward of independence and market opportunity in the ‘new normal’.

These cases help students see that entrepreneurial risk isn’t a one-size-fits-all gamble, but a calculated process involving preparation, insight, and grit.

How It’s Assessed

Students are assessed through Paper 1: Investigating Small Business. Key assessment formats include:

• Multiple-choice questions to test knowledge of terms like “risk” and “reward”.

• Short answer and explain questions using command words such as identify, explain, and analyse.

• Data response and case study questions, where students apply their understanding to hypothetical or real business scenarios.

For instance, a typical 6-mark question might be: “Explain one financial risk an entrepreneur might face when starting a new business.”

Students are expected to:

1. Identify a specific risk.

2. Explain its potential impact on a business.

3. Apply it to a business context.

Command word familiarity and scaffolded practice are key to performance here.

Enterprise Skills Integration

This topic is a natural launchpad for building wider enterprise capabilities:

• Decision-making: weighing risks and projecting potential outcomes.

• Problem-solving: mitigating risks such as customer loss or supply issues.

• Resilience and adaptability: essential for managing uncertainty and change.

Enterprise Skills tools like MarketScope AI can be introduced here to simulate market scenarios where students forecast rewards based on varying degrees of risk. This helps reinforce that entrepreneurial thinking is about strategy, not just instinct.

Careers Links

This topic aligns with Gatsby Benchmark 4 (linking curriculum learning to careers) and Benchmark 5 (encounters with employers).

Possible applications:

• Invite local entrepreneurs or alumni to share stories of how they weighed risks at different stages.

• Highlight careers such as:

  • Small business owner

  • Freelance designer or developer

  • Start-up consultant

  • Financial risk analyst

Emphasise that “entrepreneurship” isn’t just about launching the next tech unicorn – it includes sole traders, social enterprises, and side hustles too.

Teaching Notes

Teaching Tips:

• Use low-stakes simulations where students make decisions with clear trade-offs (e.g., invest in marketing vs. save cash reserves).

• Build vocabulary banks early – students often confuse risk with cost or challenge.

Common Pitfalls:

• Students assume all risk is bad. Reinforce that risk is neutral – it’s the management of it that determines the outcome.

• Overuse of vague terms like “success” or “failure” without context or measurable criteria.

Extension Ideas:

• Challenge students to re-write a real business failure story into a risk management success plan.

• Link this with financial literacy lessons (e.g., understanding interest, loans, cash flow forecasting).

Suggested Tools:

• Pitch Deck Analyser for introducing risk assessment in business proposals.

• Enterprise Skills Student Reflection Framework for helping learners identify how they’ve applied risk-reward thinking in team projects.