Risk Types

There are a variety of different ERM frameworks that summarize a method for determining, analysing, addressing, and tracking risks and opportunities, among the many inner and external ecosystem facing the business enterprise. Management would normally choose a risk response strategy for particular risks identified and analysed, that could include:

Avoidance - Stop the activity which is raising the risk profile

Reduction - Apply measures to lessen the likelihood or effect linked to the risk

Alternative Actions - Identify alternate measures and assessing the actual outcome towards present risk profiles.

Insure or Distribute Risk - As risk can not be averted you could insure against the risk transpiring or disperse the risk using a partner or partners willing to onboard some of the risk.

Accept Risk - Consider no response and accept the outcome of the risk

It's expected that management would probably implement a program of constant observing along with a feed-back system to make sure they have an understanding of their risk profiles at any stage in time, this might include conduction a Risk Assessment. This includes meetings with domain experts, recognition of current risk state along with the state of response or backup plans.

There are numerous definitions of Risk, one of the most preferred is the Casualty Actuarial Society model which conceptualised ERM as continuing across the two dimensions of Risk Type and Enterprise Risk Management Processes.

The most frequent described Risk Types are:

Financial Risk - That would include Currency Risk, Counter Party Risk, Pricing Risk, Asset Risk, Liquidity Risk

Operational Risk - Which would include Reputational Risk, Customer satisfaction, Product failure, Supply Chain Risk

Hazard Risk - Which includes Disasters, Hazardous Materials, Liability Torts, Property Injury

Strategic Risks - Which includes Social Trends, Competitive Responses, Investment capital Availability,
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