Different Types of Business Risks

Hi

Operational risk is different from all other risks. It is typically defined by a variety of international sources, including government agencies, quasi-governmental bodies, professional organizations, and consulting firms, as the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events. There is no expected reward or return on investment, like one would expect from taking market or credit risk. The only “reward” from successfully managing or mitigating an operational risk is the reduction of a potential loss.

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@ Interest Rate Risk is the risk that the relative value of a security, especially a bond, will worsen due to an interest rate increase. This risk is
commonly measured by the bond's duration.

@ Credit risk is the risk of loss due to a debtor's non-payment of a loan or other line of credit (either the principal or interest (coupon) or both)

@ Liquidity risk arises from situations in which a party interested in trading an asset cannot do it because nobody in the market wants to trade that asset. Liquidity risk becomes particularly important to parties who are about to hold or currently hold an asset, since it affects their ability to trade.

@ Volatility risk in financial markets is the likelihood of fluctuations in the exchange rate of currencies. Therefore, it is a probability measure of
the threat that an exchange rate movement poses to an investor's portfolio in a foreign currency. The volatility of the exchange rate is measured as standard deviation over a dataset of exchange rate movements.

@ Operational risk1 is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.

Hi

When you hear the words "investment risk," what first comes to mind? If you're like most people, you think of the possibility of losing money in stocks. However, by paying too much attention to this type of risk, you may end up changing your investment strategy and ultimately impeding progress toward your long-term goals.

Of course, it's easy to see why so many investors focus on the risks involved with stocks - especially in the midst of a long bear market - when you see the prices of your equities falling.

And yet, upon closer inspection, you may see the "actual risk" in a new light. It's certainly true that a stock's value can fall below the price you paid for it. On the other hand, you still own the stock - and until you sell it, your loss is only on paper. If you buy high-quality stocks and hold them for the long term, you can often overcome the effects of short-term volatility - and your paper loss may evolve into a pocketbook gain.

Unfortunately, some investors don't take this long-- term perspective. Instead, daily or monthly price swings deter them from buying stocks, and they look for investments that offer less peril. But these "safe" investments carry their own types of risk, which, in their own way, can be every bit as dangerous as the chance of losing money in stocks.


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Hi


1) Internal Risks are those risks which arise from the events taking place within the business enterprise.

The various internal factors giving rise to such risks are:-

o Human factors:- They may result from strikes and lock-outs by trade unions; negligence and dishonesty of an employee; accidents or deaths in the industry;incompetence of the manager or other important people in the organisation,etc.
o Technological factors:- They may result in technological obsolescence and other business risks.
o Physical factors:- They include the failure of machinery and equipment used in business;fire or theft in the industry; damages in transit of goods, etc.

2) External risks are those risks which arise due to the events occurring outside the business organisation. Such events are generally beyond the control of an entrepreneur.

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Hi
What are the different types of risks? There a number of differing types of risk that can affect your investments. While some of these risks can be reduced through a number of avenues - some of them simply have to be accepted and planned for in any investment decision. On a macro (large scale) level there are two main types of risk, these are systematic risk and unsystematic risk.

• Systematic risk is the risk that cannot be reduced or predicted in any manner and it is almost impossible to predict or protect yourself against this type of risk. Examples of this type of risk include interest rate increases or government legislation changes. The smartest way to account for this risk, is to simply acknowledge that this type of risk will occur and plan for your investment to be affected by it.
• Unsystematic risk is risk that is specific to an assets features and can usually be eliminated through a process called diversification (refer below). Examples of this type of risk include employee strikes or management decision changes.

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Hi

There are mainly three types of Risks:
1) Credit Risk
2) Operational Risk
3) Market Risk
Other Risks associated with an organisation are:
Liquidity Risk, Systematic Risk , Unsystematikc Risk,

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Strategical Risk, Etc.

Hi
The types of risk your business faces

The main categories of risk to consider are:

• strategic, for example a competitor coming on to the market
• compliance, for example responding to the introduction of new health and safety legislation
• financial, for example non-payment by a customer or increased interest charges on a business loan
• operational, for example the breakdown or theft of key equipment

These categories are not rigid and some parts of your business may fall into more than one category. The risks attached to data protection, for example, could be considered when reviewing both your operations and your business' compliance.


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Hello,

The main categories of risk to consider are:

• strategic, for example a competitor coming on to the market
• compliance, for example responding to the introduction of new health and safety legislation
• financial, for example non-payment by a customer or increased interest charges on a business loan
• operational, for example the breakdown or theft of key equipment

Thank You
These categories are not rigid and some parts of your business may fall into more than one category. The risks attached to data protection, for example, could be considered when reviewing both your operations and your business' compliance.

Hello,

You know very well that the world of business is dynamic. How do you handle uncertainty risk? The future is uncertain and what seemed to work very well yesterday is not a guarantee that it works today. Things change any time and the changes may bring opportunities or miseries in your businesses.
Planning alone cannot completely free us from risks. Many businessmen get it wrong that if they plan well, their businesses are completely protected from uncertainty risk. Of course, there are some losses that you cannot control.
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