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20 Types of Business Risk
 John Spacey, August 29, 2015 updated on March 22, 2021

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Business Risks

Reputational Risk

Risk Tolerance A business risk is a future possibility that may prevent you from
achieving a business goal. The risks facing a typical business are broad
Business Risks and include things that you can control such as your strategy and
Financial Risk things beyond your control such as the global economy. The following
Liquidity Risk are common types of business risk.

Liquidity Risk

1. Competitive Risk
Key Concepts
The risk that your competition will gain advantages over you that
Operational Risk
prevent you from reaching your goals. For example, competitors that
Recession Risk
have a fundamentally cheaper cost base or a better product.
Tactical Risk
2. Economic Risk
Risk Management
The possibility that conditions in the economy will increase your costs
or reduce your sales.

3. Operational Risk
The potential of failures related to the day-to-day operations of an
organization such as a customer service process. Some definitions of

Risk Treatment operational risk claim that it is the result of insufficient or failed
processes. However, operational processes that are deemed to be
complete and successful also generate risk.

4. Legal Risk
The chance that new regulations will disrupt your business or that you
will incur expenses and losses due to a legal dispute.
Risk Analysis
5. Compliance Risk
The chance that you will break laws or regulations. In many cases, a
business may fully intend to follow the law but ends up violating
regulations due to oversights or errors.

6. Strategy Risk
The risks associated with a particular strategy.
Risk Identification

7. Reputational Risk
Reputational risk is the chance of losses due to a declining reputation
as a result of practices or incidents that are perceived as dishonest,
disrespectful or incompetent. The term tends to be used to describe
the risk of a serious loss of confidence in an organization rather than a
minor decline in reputation.
Risk Mitigation

8. Program Risk
The risks associated with a particular business program or portfolio of
projects.

9. Project Risk
The risks associated with a project. Risk management of projects is a
relatively mature discipline that is enshrined in major project
management methodologies.

10. Innovation Risk

Risk that applies to innovative areas of your business such as product
research. Such areas may require adapting your risk management
practices to fast paced and relatively high risk activities.

11. Country Risk

Exposure to the conditions in the countries in which you operate such
as political events and the economy.

12. Quality Risk

The potential that you will fail to meet your quality goals for your
products, services and business practices.

13. Credit Risk

The risk that those who owe you money to fail to pay. For the majority
of businesses this is mostly related to accounts receivable risk.

14. Exchange Rate Risk

The risk that volatility in foreign exchange rates will impact the value
of business transactions and assets. Many global businesses have high
exposure to a basket of currencies that can add volatility to financial
results such as operating margins.

15. Interest Rate Risk

The risk that changes to interest rates will disrupt your business. For
example, interest rates may increase your cost of capital thus
impacting your business model and profitability.

16. Taxation Risk

The potential for new tax laws or interpretations to result in higher
than expected taxation. In some cases, new tax laws can completely
disrupt the business model of an industry.

17. Process Risk

The business risks associated with a particular process. Processes
tend to be a focus of risk management as reducing risks in core
business processes can often yield cost reductions and improved
revenue.

18. Resource Risk

The chance that you will fail to meet business goals due to a lack of
resources such as financing or the labor of skilled workers.

19. Political Risk

The potential for political events and outcomes to impede your
business.

20. Seasonal Risk

A business with revenue that's concentrated in a single season such as
a ski resort.

Risk vs Reward

There is a strong relationship between risk and reward. It's generally

impossible to achieve business gains without taking on at least some
risk. Therefore, the purpose of risk management isn't to completely
eliminate risk. In most cases, risk management seeks to optimize the
risk-reward ratio within the bounds of the risk tolerance of your
business.

Risks
This is the complete list of articles we have written about risks.

Audit Risk Bankability

Budget Risk Business Risks

Commodity Risk Contract Risk

Cost Risk Country Risk

Credit Risk Data Loss

Dispute Risk Economic Risk

Facility Risk Financial Risk

Force Majeure Grey Goo

Infinite Risk Inflation Risk

Inherent Risk Innovation Risk

Investing Risk Legal Risk

Liquidity Risk Liquidity Risk

Market Risk Model Risk

Operations Risk Partner Risk

Passive Risk Political Risk

Price Risk Process Risk

Progress Trap Quality Risk

Recession Risk Regulatory Risk

Resource Risk Revenue Risk

Risk Risk Impact

Risk Of Ruin Risk Tolerance

Seasonal Risk Security Risk

Settlement Risk Short Squeeze

Strategic Risk Supplier Risk

Systemic Risk Tactical Risk

Taxation Risk Technology Risk

Volatility Risk Weather Risk

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  Cite »

What is Business Risk?

A few definitions of business
risk with examples.

Competitive Risk
An overview of competitive risk.

What is Competitive Risk? »

7 Examples of Competitive
Risk »

What is Economic Risk?

The probability that changes in
the economy will result in a
loss to you or your business.

Existential Risk
An overview of existential risk.

What is Existential Risk? »

What is Grey Goo? »

What is an Outside Context

Problem? »

What is Facility Risk?

The potential for failures of a
facility such as data center.

Financial Risk
A list of common types of financial risk.

20+ Financial Risks »

5 Types of Audit Risk »

  What is Budget Risk? »

8 Examples of Cost Risk »

What is Force Majeure?

The chance of a large scale
negative event.

What are Health And Safety

Risks?
The potential for harm to come
to people as a result of your
business activities.

What is an Infinite Risk?

An abstract type of risk.

What is Infrastructure Risk?

Failures of basic infrastructure.

Why Innovation Risk Is

Different
An overview of innovation risk.

What is Integration Risk?

The potential for integration of
technology, processes,
information, departments or
organizations to fail.

Investing Risk
A list of common investment risks.

20+ Types of Investing Risk »

10 Examples of Bankability »

What is Commodity Risk? »

5 Types of Concentration Risk

»

Legal Risk
The definition of legal risk with examples.

What is Legal Risk? »

6 Types of Compliance Risk »

What is Contract Risk? »

What is Dispute Risk? »

Operational Risk
The definition of operational risk with examples.

5 Operational Risk Examples »

16 Examples of Errors »

What is Operations Risk?

Failures of an organization's
core business processes.

What is Organizational Risk?

Risk management at the top
level of an organization.

What is Partner Risk?

The potential that a partner
will fail to deliver on their
obligations to you.

Passive Risk
An overview of passive risk.

What is Passive Risk? »

11 Examples of Inaction »

Political Risk
The definition of political risk with examples.

6 Types of Political Risk »

11 Examples of Political
Stability »

6 Types of Process Risk

The definition of process risk
with examples.

What is Procurement Risk?

The potential for failures of a
procurement process.

What is Quality Risk?

Three common definitions of
quality risk.

What is Refinancing Risk?

The definition of refinancing
risk with examples.

What is Resource Risk?

The probability that you will
fail to meet a goal due to a lack
of resources such as skilled
workers or financing.

Risk vs Opportunity
The surprising similarities
between risk and opportunity.

What is Seasonal Risk?

The special risks associated
with seasonal businesses.

Security Risk
The potential for losses due to a physical or information security
incident.

What is Security Risk? »

What is Information Security

Risk? »

Strategic Risk
The definition of strategic risk with examples.

5 Types of Strategic Risk »

Strategic Risk vs Strategy Risk

»

What is Supplier Risk?

The potential for failure of a
supplier to deliver to their
commitments disrupts your
business.

7 Tactical Risk Examples

An overview of tactical risk
with examples.

What are Taxation Risks?

The definition of taxation risk
with examples.

Technology Risk
Common types of information technology risk.

36 Types of Technology Risk »

6 Types of Data Loss »

What is a Progress Trap? »

What is a Single Point Of

Failure? »

What is Technology Risk?

The potential for technology
failures to disrupt your
business.

What is Weather Risk?

The potential for severe
weather to disrupt business
operations or damage assets.

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