Factors affecting business risk are numerous. It is important for all types of organisations to understand the different types of business risk that could affect their company. In this article, we will go over a list of business risks, external business risks, the different business risk categories and how Sinnaps project management software can help you to effectively manage these risks.
List of Business Risks
In order to identify business risk, it is crucial to understand the different types of business risk and their implications for the company. Let’s take a look at a list of business risks:
- Strategic Risk: Out of all the kinds of business risk, strategic risk has the most implication it’s on reaching your desired goals. If a company strategy becomes less affective, objectives or not as easily met. This could be down to shifts in customer demand, new competitors, rising interest rates and other changes.
- Compliance Risk: Compliance risk refers to whether or not a company is complying with the laws and regulations that are applicable to the business and the country in which it operates.
- Financial Risk: All types of business risk tend to come with some sort of financial risk. This type of risk refers to the flow of money in and out of your company and the potential for financial loss.
- Reputational Risk: Reputational risk can also be called client business risk and it refers to the potential for a damaged reputation. A damaged reputation Will result in loss of revenue and have other effects on the company.
- Operational Risk: Any failure and your businesses day-to-day operations is known as the operational risk. This could be seen in a technical failure, for example.
Lesson 3. Work realistically: how to go from ideal to realistic planning
Causes of Business Risk of a Company
For any company to be able to deal with the different types of business risk, it is important to understand how to calculate business risk. The first step in doing this is understanding the different types of causes of business risk of a company. Let’s take a look at a few examples:
- Natural Factors
- Change in demand
- Human causes
- Change in Government policies
Sinnaps project management software allows you to effectively manage the different types of business risk associated with your different types of project with tools such as Testmode and numerous Key Performance Indicators. The planning tool has various communicative tools which will also allow you to effectively communicate any plan or measures to deal with a risk with the rest of our project team.
Create Simulations in Test Mode
External Business Risks
The classification of business risk can be broken down into internal business risks and external business risks. External business risks tend to arise due to economic events that occur outside the organisation itself. They are not as easily controlled as internal risks and the business risk exposure cannot be forecast with reliability. The following are the three types of external business risks:
- Economic risk: such as changes in market conditions.
- Natural risk: such as natural disasters.
- Political risk: such as international business risk factors, changes in the political environment and Government policies that could affect financial affairs.
Common Business Risks
The features of business risk are many. Organisations should determine factors affecting business risk within and outside their organisation in order to be able to deal with and prepare for these risks effectively. Let’s take a look at some of the most common business risks:
- Natural disasters
- Legal: such as resolving conflicts, insurance issues, contractual issues and other liabilities.
- Global events: pandemics and air traffic interruptions are examples of this.
- Technology: network failures, outdated equipment. These small business risks example may seem insignificant, however if not dealt with properly, a lot of valuable time and effort could be wasted.
- Regulatory changes: these can be carbon emission restrictions, changes in tax and water usage restrictions, for example.
- Environmental: anything from climate change to chemical spills.
- Work health and safety
Overall the types of business risks and their solutions are crucial to understand for all types of organisations. In this article, we covered the various kinds of business risk and their causes. Whether you are trying to deal with IT business risks or simple project risks, Sinnaps project management software has a number of tools to help you determine factors affecting business risk and to manage these risks efficiently and effectively. Try it out for yourself today and let us know what you think! 🙂