Business risk is a broad category. It applies to any event or circ*mstance that has the potential to prevent you from achieving your business goals or objectives. Business risk can be internal (such as your strategy) or external (such as the global economy).
Different types of risk should be managed and treated differently. You should understand exactly what type of risk you are facing before you consider how to deal with it.
These categories of risks are not rigid and some parts of your business may fall into more than one category. The risks attached to data protection, for example, could be considered when reviewing both your operations and your business' compliance.
Other sources of business risk
Other factors can present certain threats to your business, including:
environmental risks, such as natural disasters
political and economic instability in any foreign markets you export goods to
Risk is often posed by an event, a change in circ*mstances or their consequences. A common definition of risk suggests that risk is the effect of uncertainty on achieving or surpassing business objectives. This effect may be positive, negative or a deviation from the expected, for example in forecasts and projections.
Without identifying risks, it is difficult to successfully define your objectives and set out strategies for achieving them. It is best practice to integrate business risk management with your strategy formulation and business planning processes.
Understanding and managing risks allows you to control, and often prevent, the financial, organisational, legal and other ramifications associated with risks.
Risk can come in various forms and can be categorized into four main categories: financial risk, operational risk, strategic risk, and compliance risk.
The four main types of risk that businesses encounter are strategic, compliance (regulatory), operational, and reputational risk. These risks can be caused by factors that are both external and internal to the company.
As indicated above, the five types of risk are operational, financial, strategic, compliance, and reputational. Let's take a closer look at each type: Operational. The possibility that things might go wrong as the organization goes about its business.
A connected risk approach aims to connect risk owners to their risks and promote organization-wide risk ownership by using integrated risk management (IRM) technology to enable improved Communication, Context, and Collaboration — remember these as the three C's of connected risk.
13 types of business risks for companies to manage
Strategic risk. Strategic risk relates to issues that could affect a company's ability to execute against its strategic objectives and reach its business goals. ...
Business risk arises due to uncertainties. Uncertainty is when it is not known what is going to happen in future. Examples of uncertainties that affect a business are, change in government policy, change in demand, change in technology, etc.
Introduction: My name is Edwin Metz, I am a fair, energetic, helpful, brave, outstanding, nice, helpful person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
