Key Definitions

Question 1

Strategic risk

Answer 1

Long-term, high-level uncertainty that affects the organisations future direction

Question 2

Examples of strategic risk

Answer 2

Technology change, market disruption, failure to innovate, competitor behaviour, macroeconomic instability

Question 3

Operational risk

Answer 3

Short-term risks from normal day to day operations

Question 4

Examples of operational risk

Answer 4

Fraud, human error, internal control failures, IT breakdowns, loss of key staff

Question 5

Differences between strategic and operational risk

Answer 5

Strategic = big, long term, external, wide impact whereas operational = day to day, internal, narrower impact