Question

Can you explain the difference between strategic, operational, and financial risks?

Strategic risks are associated with the long-term business strategy and can impact the company's competitive position and performance. These risks can arise from changes in the business environment, wrong business decisions, or poor execution of strategies.

Operational risks are associated with the day-to-day operations of the business. These risks can arise from breakdowns in internal procedures, people, and systems.

Financial risks are associated with the financial structure of the business, its transactions, and the financial systems in place. These risks can arise from market movements, liquidity issues, or credit risks.

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To avoid issues like this, first separate potential threats into internal or external risks. For internal risks, divide them into strategic, operational, or financial.(Slide 3) From there, break them down further into separate buckets: product or design, manufacturing, systems and software, etc. Each risk category has to be managed independently.(Slide 5)

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