CMA Final · Entrepreneurship and Startup · Types of New Age Business
A drone-services startup sells its entire output to one large customer, which contributes 70% of its revenue. Which risk does this chiefly expose the startup to?
This is customer concentration risk, because a single customer provides most of the revenue, so its loss or a price renegotiation would sharply damage the startup's income. The scenario says nothing about foreign currency, inflation indexation or technology change as the main exposure.
- ACurrency translation risk
- BCustomer concentration riskCorrect
- CInflation indexation risk
- DTechnology obsolescence risk only
Explanation
Depending on a single customer for most revenue means losing or renegotiating with that customer would severely hurt the business, which is customer concentration risk. The other options are not the primary exposure described.
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