prepared for a loss; ready to operate at a deficit
Set phrase used when someone knowingly accepts a financial loss, often followed by で to describe the action taken despite the expected loss. Typically used in business or personal finance contexts.
We started the new business prepared to operate at a loss.
He sold the car at a loss, knowing he would lose money.
赤字 means 'deficit' or 'red ink' itself, while 赤字覚悟 is the expression of being mentally prepared for that deficit.
覚悟 alone means 'readiness' or 'resolution'; 赤字覚悟 specifically applies that readiness to financial loss.
Compound of 赤字 (deficit, literally 'red characters') and 覚悟 (preparedness, resolution). The phrase likely emerged from business contexts where red ink traditionally indicates a loss.