A company's strategy becomes less effective over time and it struggles to reach its defined goals.
If, for example, Walmart strategically positions itself as a low-cost provider and Target decides to undercut Walmart's prices, this becomes a strategic risk. This arises in industries and sectors which are highly regulated with laws.
When revenues drop, the company may not be able to service its debt, which may lead to bankruptcy.
On the other hand, when revenues increase, it experiences larger profits and is able to keep up with its obligations.
A quantitative risk analysis provides an organization with more objective information and data than the qualitative analysis process, thus aiding in its value to the decision-making process.
Anything that threatens a company's ability to meet its target or achieve its financial goals is called business risk.
Business risk is associated with the overall operation of a business entity.
These are things that impair its ability to provide investors and stakeholders with adequate returns.
Business risk usually occurs in one of four ways: strategic risk, compliance risk, operational risk, and reputational risk.
Strategic risk arises when a business does not operate according to the business model or plan.