How to Differentiate Risks
Differentiate risk among components including strategic, hazard, financial, and operations
Differentiating Risk Components
Strategic Risk
- Arises from long-term business decisions and external market forces.
- Examples: Changing regulations, technological disruptions, competition, reputation damage.
- Mitigation: SWOT analysis, scenario planning, strategic diversification.
Hazard Risk
- Stems from unforeseen events causing physical or liability-related harm.
- Examples: Natural disasters, workplace accidents, cybersecurity breaches.
- Mitigation: Insurance, safety protocols, compliance measures.
Financial Risk
- Related to monetary losses, investments, and economic instability.
- Examples: Market fluctuations, credit defaults, liquidity shortages.
- Mitigation: Diversified investments, risk hedging, financial audits.
Operational Risk
- Linked to internal processes, systems, and human errors.
- Examples: Supply chain failures, IT breakdowns, employee fraud.
- Mitigation: Process optimization, employee training, internal controls…
Differentiating Risk Components
Strategic Risk
- Arises from long-term business decisions and external market forces.
- Examples: Changing regulations, technological disruptions, competition, reputation damage.
- Mitigation: SWOT analysis, scenario planning, strategic diversification.
Hazard Risk
- Stems from unforeseen events causing physical or liability-related harm.
- Examples: Natural disasters, workplace accidents, cybersecurity breaches.
- Mitigation: Insurance, safety protocols, compliance measures.
Financial Risk
- Related to monetary losses, investments, and economic instability.
- Examples: Market fluctuations, credit defaults, liquidity shortages.
- Mitigation: Diversified investments, risk hedging, financial audits.
Operational Risk
- Linked to internal processes, systems, and human errors.
- Examples: Supply chain failures, IT breakdowns, employee fraud.
- Mitigation: Process optimization, employee training, internal controls…
Differentiating Risk Components
Strategic Risk
- Arises from long-term business decisions and external market forces.
- Examples: Changing regulations, technological disruptions, competition, reputation damage.
- Mitigation: SWOT analysis, scenario planning, strategic diversification.
Hazard Risk
- Stems from unforeseen events causing physical or liability-related harm.
- Examples: Natural disasters, workplace accidents, cybersecurity breaches.
- Mitigation: Insurance, safety protocols, compliance measures.
Financial Risk
- Related to monetary losses, investments, and economic instability.
- Examples: Market fluctuations, credit defaults, liquidity shortages.
- Mitigation: Diversified investments, risk hedging, financial audits.
Operational Risk
- Linked to internal processes, systems, and human errors.
- Examples: Supply chain failures, IT breakdowns, employee fraud.
- Mitigation: Process optimization, employee training, internal controls…
