Risk is the potential for future losses due to an action or inaction. It is a product of uncertainty that inherently surrounds all decisions, strategies and actions. It is a fundamental aspect of all things that is driven by uncertainty. All endeavors have risk and as such, identifying and managing risk is a fundamental component of decision making that comes up on a daily basis.

A business risk is a future possibility that may prevent the achievement of a business goal. The risks facing a typical business are broad and include things that you can control such as your strategy and things beyond your control such as the global economy. The following is a guide to common types of risk.

Artificial Intelligence Risks
A special category of technology risk associated with machines that learn and self-improve.

Budget Risk
The potential to spend more than budgted or in the bank. In most cases, staying under budget is considered a positive risk.

Commodity Risk
Price fluctuations in basic commodities such as corn is a type of economic risk for many businesses and investments.

Competitive Risk
The potential for competitors to outperform or take adverse actions that cause losses. For example, a competitor may institute a price war that causes revenue and margins to drop across the market.

Compliance Risk
The risk that a company will be deemed to have violated a law or regulation.

Concentration Risk
The potential for loses due to focusing too much on a particular type of investment or business deliverable/model. This sums up most small businesses.

Contract Risk
The chance that a counter party will fail to meet the terms of a contract.

Country Risk
Overexposure of a business or investment portfolio to a single country. Long-term, this risk is rather low in most of the developed world.

Credit Risk
The chance that a customer or counterparty will fail to pay what they owe.

Exchange Rate Risk
Foreign exchange or crypto exchange fluctuations that result in losses to a business or investment.

Dispute Risk
The potential for a dispute with a regulator, customer, partner, employee or member of the community.

Dread Risk
Risks that trigger emotions such as fear. In most cases, the brain is designed to minimize dread risks at any cost.

Economic Risk
The chance that global or regional economic conditions will impact the finances of the business or individual.

Existential Risk
The potential for an event or process that results in significant reductions in quality of life on a global basis.

Financial Risk
A general term for all the risks related to money.

Force Majeure
A term for major negative events such as a war, hurricane, earthquake or volcanic eruption.

Health And Safety Risk
The potential for harm to come to people.

Infinite Risk
A theoretical type of risk that has infinite impact.

Inflation Risk
The potential for the declining value of money based on increased supply of currency in a country. In countries like the United States, owning assets is typically the only way to battle the risk.

Infrastructure Risk
The risk that basic services such as an electric grid will fail.

Innovation Risk
A class of risk associated with experimentation and aggressive change.

Integration Risk
The chance that things won’t work together well. Integration of organizations, business processes and technologies tends to be a particularly risk prone type of endeavor.

Interest Rate Risk
Interest rate fluctuations can lead to losses. A high interest rate places strain on businesses that need financing. A low interest rate promotes over growth.

Investment Risk
A broad category of risk that includes virtually anything that can cause an investment to decline in value or fail entirely.

Legal Risk
The risk of losses due to regulatory or legal actions.

Liquidity Risk
The risk of running out of cash and credit.

Model Risk
Risk related to financial models for investment such as asset valuation models. In some cases, a model may work against one set of conditions but fail under a certain amount of stress.

Operations Risk
The potential for failures within an organization’s core business processes.

Political Risk
Risks related to political change or instability. Politics affect things like taxes, business regulations and interest rates that impact industries, businesses and buyers.

Process Risk
Failure of a business process such as a human error or machine error.

Procurement Risk
Procurement is the process of securing goods and services that is prone to a number of risks including fraud, quality and delivery, trust, et al.

Program Risk
Risks related to a program of related projects such as the potential for a failure in dependencies or integration.

Project Risk
Risks related to a project. In many cases, projects have a high rate of failure due to a number of common risks.

Quality Risk
The potential of failure to meet a set of quality goals.

Recession Risk
The chance that a period of economic contraction will result in losses to an investment.

Refinancing Risk
The possibility that it will be difficult or impossible for a borrower to continue to find new sources of financing at acceptable interest rates when existing financing runs out. This could happen with debt (e.g. bonds) matures and comes due.

Regulatory Risk
Changes to laws and regulations that negatively affect a business or investment.

Reputational Risk
The term reputational risk is typically applied to the potential for a major negative event that threatens reputation. Such risks may threaten the survival of a business and are typically related to financial mismanagement, corporate governance, information security, violation of laws or environmental practices.

Residual Risk
The risk that remains after action is taken to treat risk.

Resource Risk
Related to a lack of resources such as labor, financing, or inputs like raw materials.

Seasonal Risk
An overexposure to a single season such as a lake resort in Canada that generates most of its revenue in a three month period. Leaves a business exposed to factors such as weather and climate change.

Secondary Risk
Risk that results from attempts to reduce, transfer or avoid risk.

Security Risk
Risks related to physical and information security.

Settlement Risk
Settlement risk is the potential that a financial trading partner will fail to deliver funds, securities or assets as required by a transaction.

Strategic Risk
Risks related to a strategic plan including factors such as competition, deliverables, regulation and economy.

Strategy Risk
Risk related to a particular strategy.

Systemic Risk
A potential for a failure of the global financial or political system.

Tactical Risk
Risks related to a tactical action.

Taxation Risk
The potential for changes to tax laws or interpretations to result in higher taxes.

Technology Risk
A broad category of risk related to technology including how to secure data.

Volatility Risk
The risk of a change in price of a portfolio as a result of changes in the volatility of a risk factor. Typically applies to derivatives, where the volatility of its underlying asset is a major influencer of prices.

Weather Risk
Risks related to weather.