Risk Flashcards
What is the definition of Risk?
The possibility of something bad happening.
What is the definition of Uncertainty?
Where the decision-maker either does not know the possible outcomes, or probability that they will occur.
What is the definition of Business Risk?
A business’s vulnerability to factors that could decrease its profits or cause the business to fail.
What are the 3 different types of Risk?
Strategic Risk
Financial Risk
Operational Risk
What is Strategic Risk?
Risks that arise from the fundamental decisions of the business directors. This could be about objectives or strategies.
What is Financial Risk?
Risks coming from a change in financial conditions.
This could be a change of interest rates or credit rating.
What is a Operational Risk?
A risk that arises from the way an organisation operates its business functions.
What are the 5 types of Operational Risk?
Process Risk
People Risk
Systems Risk
Legal and Regulatory Risk
Event Risk
What is Process Risk?
Risks of loss inherent to the processes of a business. e.g. not doing a bank rec.
What is People Risk?
Risk caused from issues caused by people working in an organisation.
What is Systems Risk?
Risks which are dependent on computer systems in all aspects of their operations. e.g. a payroll system.
What is Legal and Regulatory Risk?
The risk of loss resulting from an organisation failing to comply with legislation and/or regulations.
What are the 4 different types of Event Risk?
Physical Event Risks
Social Event Risks
Political Event Risks
Economic Event Risks
What is a Physical Event Risk?
The risk of fire, floods, which could damage documents or interrupt business.
What is Social Event Risk?
Risk of using inexpensive labour - ‘slave labour’
