Risk and types Flashcards
Any situation where there is uncertainty about what outcome will occur.
- possibility of losing something in value
- an aspecct of action taken in spite of uncertainty
- not guaranteed but only be projected
- is essential
Risk
the outcome that would occur on average overtime if a person or business were repeatedly exposed to the same type of risk.
Expected Value
is the subjective judgement that people make about the characteristics and severity of a risk.
Risk perception
is a future possibility that may prevent you from achieving a business goal.
BUSINESS RISK
Conditions that may pose a risk and cause the business to fail
- Increased competition
- Economic circumstances
- Financial situations
- Consumer preferences
- Change in government policy
- Outmodedness
- Other inherent factors
the risk that your competition will gain advantages over you that prevents you from reaching your goals. Example, competitors that have a fundamentally cheaper cost base or a better product.
Competitive Risk
The possibility that conditions in the economy will increase your costs or reduce your sales.
Economic Risk
The potential of failures related to day to day operations of the organization such as a customer service process
Operational Risk
The chance that new regulations will disrupt your business or that you will incur expenses or losses due to a legal dispute. Examples include filing procedures, employment law, environmental law, tax law, and ownership requirements.
Legal Risk
The chance that you will break laws or regulations. In many cases, a business may fully intend to follow the law but ends up violating regulations due to oversight or errors.
Compliance Risk
The risk associated with a particular strategy that was based on the SWOT analysis that has now changed which prevents you to achieve your goal. Example : advent of Covid that prevented you to attain 10% increase in sales
Strategy Risk
It is the chance of losses due to a declining reputation as a result of practices or incidents that are perceived as dishonest
Reputation Risk
The risk associated with a particular business program or portfolio of projects. Example Retirement program.
Program Risk
The risk associated with a project. Risk management of projects is a relatively mature discipline that is enshrined in major project management methodologies.
Project Risk
Risk that applies to innovative areas of your business such as product research. Such areas may require adapting your risk management practices to fast paced and relatively high risk activities
Innovation Risk
Exposure to conditions in the countries in which you operate, such as political events and the economy.
Country Risk
The potential that you will fail to meet your quality goals for your products, services and business practices
Quality Risk
The risk that those who owe you money to fail to pay. For the majority of businesses this is mostly related to accounts receivable risk.
Credit Risk
the risk that volatility in foreign exchange rates will impact the value of business transactions and assets. Many businesses have high exposure to a basket of currencies that can add volatility to financial results such as operating margins.
Exchange Rate Risk
The risk that changes to interest rates will disrupt your business. For example, interest rates may increase your cost of capital thus impacting your business model and profitability
Interest Rate Risk
The potential for new tax laws or interpretations to result in higher than expected taxation. In some cases, new tax laws completely disrupt the business model of an industry
Taxation Risk
The business risks associated with a particular process. This tends to be a focus of risk management, as reducing risks in core business processes can often yield cost reductions and improved revenue.
Process Risk
The chance that you will fail to meet business goals due to lack of resources such as financing for the labor of workers
Resource Risk
The potential for political events and outcomes to impede your business
Political Risk
A business with revenue that is concentrated in a single season such as ski resort.
Seasonal Risk
the various operational difficulties which may include a temporary inability to convert assets to cash thus resulting to the inability of correspondents to perform settlement functions.
Liquidity Risk
Also called Systematic Risk. The likelihood that an investor may experience losses due to the dynamics that influence the general (may be global ) performance of the financial markets
risk of losses on financial investments caused by adverse price movements. (ex. changes in commodity prices, interest rate, equity prices, foreign exchange fluctations)
Market Risk
the potential for sales failures. Potential events or conditions that result in the failure to meet a sales objective or goal. Reasons vary.
- can be due to poor quality or outdated
- may be due to poor promotions/advertisement
Sales Risk
Losing management support that may be attributable to a change in focus or change in manpower.
Management Risk
The likelihood for the approximations or estimations built into a budget to end up to be insufficient in numbers.
Budget Risk
