Page 193 - SBL Integrated Workbook STUDENT 2018

Identification, assessment and measurement of risk

Risk that business operations may be inefficient or
 Operational risk
business changes may fail.

 Contractual inadequacy Risk that the terms of a contract do not fully cover a
risk business against all potential outcomes.

Risks which derive from the sector in which the
 Market risks
business is operating, and from its customers.

The risk that customers will not buy new products
(or services) provided by the organisation or that the
– Product risk
sales demand for current products and services will
decline unexpectedly.

Businesses might be exposed to risks from
– Commodity unexpected increases (or falls) in the price of a key
price risk
commodity.

Some companies rely heavily on brand image and
– Product reputation product reputation, and an adverse event could put
risk
its reputation (and so future sales) at risk.

Credit risk is the possibility of losses due to non-
– Credit risk
payment, or late payment, by customers.

Currency risk, or foreign exchange risk, arises from
the possibility of movements in foreign exchange
– Currency risk
rates, and the value of one currency in relation to
another.

Interest rate risk is the risk of unexpected gains or
– Interest rate risk losses arising as a consequence of a rise or fall in
interest rates.

This arises from the possibility that technological
– Technology risk
change will occur.

This refers to the risks facing organisations from
changes in economic conditions, such as economic
– Economic risk growth or recession, government spending policy
and taxation policy, unemployment levels and
international trading conditions.

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