2.6 Strategic Risks
Strategic risks are from events like a recession, a financial crisis, or a pandemic like COVID-19 can threaten or provide opportunities to organizations.
These are outside the control of organizations and external to an organization. These are also from the speculative risk category, where the outcome could be positive or negative.
Type of Strategic Risks
There are three major types of Strategic Risk in the context of national or global conditions. The following are the three major Strategic Risks:
- Economic environment
- Demographics
- Political environment
Economic Environment
Under this strategic risk, there are several Key Risk Indicators that may help to identify the risk and take action:
- Gross Domestic Product (GDP)
- Inflations
- Financial crisis
- International trade flows and restrictions
Demographics
This refers to the characteristics of human populations. For example, the aging population and their expenses on health care, immigration, and younger populations in any specific area.
Political Environment
An action by one government to stop imports protecting local manufacturing or increase or decrease tariffs due to the political environment.
Effective supply chain & operations risk management entails recognizing and addressing risks across these four quadrants to guarantee the continuity and profitability of a business.
