Strategic risk is the risk of potential failures in strategic planning, which may lead to a company not achieving its core objectives. There are several types of strategic risks that businesses should be aware of and plan for. Some of the common types of strategic risks include:
1. Reputational risk: This type of risk can affect public perception or employee engagement with a company. For example, a company’s reputation can be damaged by negative publicity, poor customer service, or unethical behavior ?.
2. Regulatory risk: Regulatory risks arise from changes in laws and regulations that can impact a company’s operations. For example, new regulations can increase compliance costs or limit the ability to operate in certain markets .
3. Competitive risk: Competitive risks arise from changes in the competitive landscape that can impact a company’s market position. For example, new competitors can enter the market or existing competitors can introduce new products or services .
4. Financial risk: Financial risks arise from changes in financial markets that can impact a company’s financial performance. For example, changes in interest rates or exchange rates can impact a company’s profitability ?.
5. Operational risk: Operational risks arise from internal factors such as inadequate or failed business processes, employee errors, or cybersecurity events that can impact a company’s operations and financial performance ?.
6. Strategic execution risk: This type of risk arises from the failure to execute a strategy effectively. For example, launching a new product or entering a new market without proper planning and execution can lead to failure .
7. Environmental risk: Environmental risks arise from changes in the natural environment that can impact a company’s operations and financial performance. For example, climate change can lead to increased costs due to extreme weather events or regulatory changes .
8. Geopolitical risk: Geopolitical risks arise from changes in political conditions that can impact a company’s operations and financial performance. For example, changes in trade policies or political instability in certain regions can impact a company’s ability to operate effectively .
9. Technology risk: Technology risks arise from changes in technology that can impact a company’s operations and financial performance. For example, new technologies can disrupt existing business models or create new opportunities for growth .