What is corporate risk?
The risks associated with a large commercial company. Implies a business or commercial organisation driven by a profit motive and with shareholders or other owners to satisfy
What is business risk?
The probability of loss inherent in an organisations operations and environment. The effects of competition and risks arising from changes in the competitive environment
What is strategic risk?
Associated with a vision, mission and long-term objectives of an organisation. They relate to decisions the organisation makes about its direction, product mix and target markets
What is financial risk?
Covers a complex group of risks associated with the financing of business activities and with specific financial transactions, including borrowing, lending and the issuing of insurance contracts
What areas are included in financial risks?
- accuracy of financial reporting of business activity and profit or loss
- valuation of properties, commodities, investments, debts, currency
- market, liquidity and credit risks
What is market risk/systematic risk?
The risk of losses in trading positions arising from movements in market prices. It can be highly volatile and change on a daily basis
What is included in market risk?
- equity risk
- property price risk
- solvency risk
What is credit risk?
The risk that a counterparty will suffer a real or perceived deterioration in financial strength or will be unable to pay amounts in full when due. Credit risk is associated with the creditworthiness of those with whom an organisation does business
What is default risk?
The probability of a debtor being unable to repay its loan obligations
What is concentration risk?
Banks avoid either too much loan exposure to a single multinational company or to a single industry
What is liquidity risk?
The risk of running out of cash when it is needed to meet financial obligations
What are legal risks?
Alleged or actual breach of contract between an organisation and a counterparty
What are regulatory risks?
Associated with factors an organisation needs to consider because of the regulatory environment in which it operates
What is compliance risk?
Failure to comply with laws and regulations may incur large financial penalties or fines
What is operational risk?
The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events
Why would you use outsourcing?
- potential cost savings
- scalability
- agility
- access to specialist knowledge
What legal protections are in the UK?
GDPR and Data Protection Act 2018
What are boundary risks?
Difficult to classify risks
What is reputational risk?
Possible loss of an organisations reputation. Closely associated with brand management and accordingly the factors surrounding it concern levels of public confidence or trust
What are speculative risks?
Aims to make a gain, but carries the possibility of break-even or failure
What are pure risks?
Possibility of a loss but not of gain and where the best that can be achieved is a break-even. These are generally uninsurable
What are fundamental risks?
Risks that occur on such a vast scale. Those that arise from social, economic, political or natural causes and are widespread in their effective
What are particular risks?
Localised or even personal in their cause and effect
What is underwriting risk?
Insurer carries the risks that a policy wording may give wider cover than that which was intended or perhaps the wording is ambiguous
