Question

Q: 1. Give brief answers for the following questions:

I. Define ‘operational risk management’.

II. What is strategic risk?

III. What is people’s risk?

IV. What are the key areas of risk associated with business objectives?

Answer 1

I. Define ‘operational risk management’.
Operational risk management is the decision making tool which helps in identifying and making solutions to the risks involved in the organizations. It is the process which includes the assessment of risk, decision making and taking measures to control risk in future.

II. What is strategic risk?
Strategic risk is that type of risk which has failed business decisions. It may arise because of bad decision making. Strategy risk explains the chances that the strategy will occur losses in future.

III. What is people’s risk?
As the name suggests people's risk is the risk which will arise as the result of the activities which the people in an organization pursue, that will affect your business in a negative manner.
It is uncontrollable side of what the people do.

IV. What are the key areas of risk associated with business objectives?
Risk associated with business objectives are-
1) Operational risk
Operational risk relates to the failure of the day to day activities performed in the business.
2) Legal risk
The risk associated with new regulations and policies made by the government that will affect your business in a negative manner.
3) Economic risk
It involves the conditions involved in the economy that might decrease the sales and increase the cost in your business.
4) Competitive risk
This risk arise when your competitor gets a better product than you with a cheaper price, then he will have a advantage over you and as a result your sale will decline