Strategic risk

Definition: Risk is the effect of uncertain future events on an organization or on the outcomes and impacts the organization achieves. (View source )

Strategic risk is the risk that failed decisions may pose to an organisation. Strategic risk is often a major factor in determining a company's worth, particularly observable if the company experiences a sharp decline in a short period of time. Due to this and its influence on compliance risk, it is a leading factor in modern risk management. (View source)

Strategic risks are those that threaten to disrupt the assumptions at the core of an organization’s strategy. They’re often hard to spot and hard to manage. What makes them especially difficult for executive teams is that traditional approaches view risk as mainly negative—things to hedge or mitigate. Strategic risks are different, since they can also point to an organization’s next opportunity. With strategic risks, executives are forced to make a choice: “Are we going to try to resist this, avoid it and push it off if possible? Or are we going to embrace it as an indicator of where the market is going and where our next big opportunity may be?”. Strategic risks can appear as sources of likely disruption to a whole industry, and that makes them very powerful. Organizations that can accelerate the discovery of these risks will likely have an advantage. The faster they can find the weak signals of potentially disruptive change, the more time they have to plan and to act. (View source)

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