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22 Strategic Risks

        posted by , February 02, 2013

The words "strategic risk" strike fear into the hearts of investors and executive leaders everywhere.

Strategic risk invokes images of imploding companies, scandal and loss.

The path to managing the business menace of strategic risk begins with risk identification. The following risk types are a good starting point.

1. Corporate Governance Risk

The risk that insiders (employees) won't act in the best interest of the owners (stockholders) of a firm.

2. Strategy Execution Risk

The risk that business strategy execution will fail.

3. Strategy Forecast Risk

The risk that your business strategy will be off the mark. For example, invalid sales forecasts.

4. Competitive Risk

The risk of a decline in competitive advantage.

5. Innovation Risk

An inability to innovate (failed innovation investments). Some firms struggle to establish an innovation culture.

6. Technology Risk

The risk that your technology strategy will fail. For example, that your technology KPI will fall behind the competition.

7. Intellectual Property Risk

The risk of intellectual property loss and liability.

8. Merger & Acquisition Risk

Integrating firms is almost always a high risk activity.

9. Change Management Risk

The risks associated with organizational change.

10. Program & Project Risk

The risks associated with program & project failures. In some industries more than 50% of projects fail.

11. Marketing & Sales Risks

The risk that marketing and sales forecasts and metrics will fall short of expectations. For example, the risk of new product development failure.

12. Operational Risks

The risk of operations failures. For example, the risk that logistical problems will cause orders to be canceled.

13. Talent Management Risk

The risk of losing key talent to the competition.

14. Security Risk

The risk of a information security incident. Information security incidents can damage reputation, cause compliance issues and result in the loss of intellectual property.

15. Liability Risk

The risk that your products, services or corporate execution leads to legal liability issues.

16. Compliance Risk

The risk of non-compliance with regulations and law.

17. Sustainability Risk

The risk of missing sustainability targets or non-compliance with environment laws and regulations. Sustainability is increasingly important to reputation. It's a central theme of the principles and ethics of many firms.

18. Reputational Risk

The risk of bad publicity or negative relationships with employees, customers, partners, counterparties and regulators. Reputational risk can be a serious threat to the assets of a firm.

19. Financial Risk

Risks to the financial health of your firm. For example, the risk that you'll be unable to raise sufficient capital to fund operations.

20. Systemic Risk

The risk of collapse of the global financial system or the financial system of a country.

21. Political Risk

The risk that the political environment will turn hostile to your firm.

22. Force Majeure

A catastrophe such as a act of nature or war.

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What Competitive Advantage Really Means A business with competitive advantage is like a star professional athlete: they're in a league of their own. They're not necessarily good at everything but they do a few things very well.

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