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Risk Definitions
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External Risks These risks arise from external forces impacting the organizations value
chain, including fundamentals that affect the overall objectives and strategies. These are
typically presented by the general business environment and are not within the control of the
organization, but are within the ability to influence or react.
1. Competitor risk: New entrants, exits, or actions of competitors in the market that impact the
organization.
2. Economic risk: Changing economic conditions (e.g. local, regional, and/or global) that
impact the organization.
3. Legal/Regulatory risk: Changing or new laws or regulations that impact the organization.
4. Market requirements risk: Changing or new market/customer requirements that impact the
organization.
5. Political risk: Changing political conditions in a country or region that impact the
organization.
6. Technological innovation risk: Changing or new technologies in the external market place
that impact the organization.
Financial Risks These risks arise from activities that provide input into business and
financial reporting, impacting the achievement of the organizations objectives.
7. Budget & forecasting risk: Unreliable, unrealistic, or non-existent budgeting and/or
forecasting information or processes including S&OP and the annual budgeting process.
8. Credit risk: Exposure to loss or opportunity cost as a result of financial default, or other
financial failure by a customer, dealer, or third party.
9. Financial & regulatory reporting risk: Incomplete, inaccurate, or untimely financial or
regulatory reporting (internal or external).
10. Fraud risk: Fraudulent activities (e.g. achieving personal gain while causing injury to
another party, unfair or unlawful gain, misleading others for personal benefit) by employees,
customers, suppliers, agents, brokers or third-party administrators.
11. Investment evaluation & monitoring risk: Lack of relevant, reliable, or complete information
supporting investment decisions, including ongoing monitoring of investments.
12. Liquidity risk: Inability to meet cash flow obligations in a timely and cost-effective manner,
including unplanned cash flow fluctuations or concentration to a limited group of counter
parties.
Strategic Risks These risks arise from activities to determine and support the future
direction of the organization, impacting the achievement of the organizations
strategies.
33. Alignment risk: Failure to align business unit objectives with either process partner or
enterprise wide objectives and/or strategies. This may also include an ineffective
organization/reporting structure.
34. Business intelligence risk: Absence of sufficient or accurate knowledge of the external
business environment.
35. Intellectual property risk: Failure to adequately protect intellectual capital, proprietary
processes, trademarks, brands, designs, etc.
36. Planning risk: Failure to adequately develop, update or change plans.
37. Product development risk: Failure to develop viable or innovative products or services.
38. Product/Service pricing risk: Failure to price a product or service within a range that is
acceptable to the customer and delivers appropriate profitability to the business unit.
39. Resource allocation risk: Inability to efficiently allocate resources (e.g. time, assets, people)
or the absence of sufficient levels of these resources.
40. Unbalanced measurements risk: Overemphasis on a particular metric or measurement at
the expense of other metrics or measures (e.g. cost versus quality).