Risk Categories

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Risk categories are custom or standard categories, enabling you to quickly determine what risks belong where. The table below includes a few examples of the most commonly used risk categories as well. Please note that you can always set up custom categories via the settings page. Click here to learn more about how to define categories.

  1. Financial Risk
    Definition: the possibility of losing money on an investment or business venture.
    Example: A company takes out a loan to expand its operations but fails to generate enough revenue to cover the loan repayments, leading to bankruptcy.
  2. Operational Risk
    Definition: The risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events.
    Example: A manufacturing plant has to halt production due to a critical machinery breakdown, causing significant delays in product delivery and financial losses.
  3. Security Risk
    Definition: the risk of harm due to a breach in information security, physical security, or other threats.
    Example: A cyberattack on a company’s network allows hackers to access sensitive customer data, leading to identity theft and damage to the company’s reputation.
  4. Vendor Risk
    Definition: The risk associated with relying on third-party vendors for goods or services, which may affect the company’s ability to meet its obligations or maintain its reputation.
    Example: A key supplier fails to deliver crucial components on time, disrupting the production schedule and causing financial losses.
  5. Fraud Risk
    Definition: the risk of intentional deception made for personal gain or to damage another individual or entity. Example: An employee embezzles funds by falsifying expense reports, leading to financial losses for the company.
  6. Brand Risk
    Definition: The risk of damage to a company’s reputation, affecting its brand value and customer loyalty.
    Example: A company is found to have used unethical labor practices in its supply chain, leading to a consumer boycott and a decline in sales.
  7. Strategic Risk
    Definition: The risk that a company’s strategic decisions will not achieve its business objectives, affecting its competitive position.
    Example: A company decides to enter a new market without thorough research, resulting in failure to capture market share due to strong local competition and a lack of consumer interest.
  8. Legal Risk
    Definition: The risk of financial or reputational loss that a company faces due to lawsuits, non-compliance with laws, or adverse judgments.
    Example: A company is sued for patent infringement by a competitor, resulting in costly legal battles and possible financial compensation.
    These examples illustrate how different types of risks can impact various aspects of a business, underscoring the importance of effective risk management strategies.

Note: You can add or delete a category from the “Settings” page as and when needed.

The following screenshot shows the risk categories.

Risk Categories

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