Any company, at any given point of time, has these 5 types of business risks. These risks are so important and big that when they occur, bring huge losses to the company.
The First type of business risk is the Strategic Risk
Business Risk - Strategic
This is a major risk for any business. This risk occurs when either businesses take wrong decisions or affects the big decisions taken. Strategic risks are the important focus of many organizations now.
Business Risk - Financial
Examples of financial risk include default in debt payments, decline in credit score etc. If the financial risk occurs, it would result in negative financial impact to the organization like waste or loss of assets.
Business Risk - Regulatory
Regulatory risks are those risks which expose the organization to huge fines and penalties if the regulations are not complied with. Regulatory risks also include risk of change in regulations or laws which will have a negative impact to the organization.
Business Risk - Reputational
Reputational risks are those anything which bring negative publicity to the organization, impacting its growth and revenue.
Business Risk - Operational
Operational risks are those which prevent organization from operating efficiently. Operational risks are generally caused by employee errors, company policies etc.
It is imperative for any company to address all business risks in order to carry out its function in a smooth and efficient manner.
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