The main business risks faced by entrepreneurs in Latvia are related to the centralization of resources, demographic problems and corruption. Neither is of great importance, but combined with other adverse circumstances can pose a significant risk, possibly even leading to bankruptcy. A for minor risks, there are some logistical crime and petty crime concerns in certain areas.

Big risks
In Latvia there are three major business risks that can affect companies in all parts of the country:

resource centralization
demographic issues
corruption
Individually, they don't pose much of a threat, especially to established foreign companies. These risks are minimal for foreign companies based in Riga (the capital of Latvia), apart from a few cases of corruption. However, the further away from the capital, the clearer the risks, which is somewhat offset when the geography of the business includes cities of regional importance.

Resource centralization
Almost a third of the companies registered in Latvia are headquartered and operate mainly in Riga. Although this somewhat reduces competition in more distant areas, it also means that most of the resources, finance, labor and customers are also concentrated in Riga. In addition, most of the universities are located in the capital, which means that the majority of students – qualified young specialists – are not available in other regions or have to be persuaded to move to these other regions through additional benefits.

Even if a foreign company itself is also registered, has its headquarters and operates mainly in Riga, centralization can pose challenges for expansion. Sometimes it is not possible to open branches in other regions of Latvia due to the above restrictions. In this case, the only way to expand is to provide services and products remotely/digitally, or to specialize in services that don't require physical interaction. Another option is to build a nationwide logistics network that delivers products and services. Thanks to Latvia's small size, this is not the most difficult task, but it still requires time, investment, manpower, planning and other resources, which can limit other aspects of business development.

Demographic issues
As of now (2016) Latvia's demographic problems are not so significant, but still noticeable. According to the Latvian Central Statistical Office (Latvijas Centrālā statisticas pārvalde), the Latvian population began to decline in 1991, and over the years the rate of decrease slowed until the 2008 financial crisis, when for a brief moment the rate picked up again. Now the rate is falling again: every year since 2010, when the country started to revive its economy, Latvia loses about 5% - 10% less than every year before.

Despite this, the decline is still there and most notably among young people, professionals with higher education prefer to look for a job abroad. At this rate, the decline will level out in about 10 years. Until then, the drain of potential labor and customers hinders the operations of any business, especially in the long term.

Corruption
Corruption in Latvia is mainly related to the need to maintain good personal contacts with business partners and to participate in extra-professional activities, without which reaching an agreement can be problematic in some cases. This is particularly important in the early stages of market entry. It is very important to build a good first contact relationship with the local business people and organize meetings with local suppliers. Otherwise, settling in Latvia can become problematic.