Risks to an organization’s image are referred to as what kind of risk?
A.
Operational
B.
Financial
C.
Information
D.
Strategic
Explanation:
Strategic risks are those risks which have potential outcome of not fulfilling on strategic objectives
of the organization as planned. Since the strategic objective will shape and impact the entire
organization, the risk of not meeting that objective can impose a great threat on the organization.
Strategic risks can be broken down into external and internal risks:
External risks are those circumstances from outside the enterprise which will have a potentially
damaging or helpful impact on the enterprise. These risks include sudden change of economy,
industry, or regulatory conditions. Some of the external risks are predictable while others are not.
For instance, a recession may be predictable and the enterprise may be able to hedge against the
dangers economically; but the total market failure may not as predictable and can be much more
devastating.
Internal risks usually focus on the image or reputation of the enterprise. some of the risks that are
involved in this are public communication, trust, and strategic agreement from stakeholders and
customers.
Reference: CRISC, Contents: “Assessing Risks”
Answer B is incorrect. Financial risks are not directly linked with organization’s reputation.
Answer C is incorrect. Risk associated with leakage of information to an unauthorized person
does not affect organization’s image.
Answer A is incorrect. Operational risks are those risk that are associated with the day-to-day
operations of the enterprise. They are generally more detailed as compared to strategic risks. It is
the risk of loss resulting from inadequate or failed internal processes, people and systems, or from
external events. Some sub-categories of operational risks include:
Organizational or management related risks
Information security risks
Production, process, and productivity risks
Profitability operational risks
Business interruption risks
Project activity risks
Contract and product liability riss
Incidents and crisis
Illegal or malicious acts