Risk Definition

* The possibility of suffering harm or loss; danger.
* Defined as the likelihood and potential impact of an adverse event or circumstance.

Types of Risks

1. Financial Risk: Related to financial losses, such as market volatility or interest rate changes.
2. Operational Risk: Involves risks associated with an organization's internal processes, systems, and people.
3. Strategic Risk: Concerns the alignment of an organization's strategy with its goals and objectives.
4. Compliance Risk: Refers to the risk of non-compliance with laws, regulations, or industry standards.
5. Reputational Risk: Involves damage to an organization's reputation due to negative publicity or scandals.
6. Environmental Risk: Concerns the impact of an organization's activities on the environment.

Risk Ranking

* Adopting a systematic approach to identifying risk factors, assessing severity, and evaluating probability provides a solid foundation for effective risk ranking.
* Grasping the characteristics of risks is crucial in developing an effective risk management strategy.