Business Risk

Business risk is the risk that the company won't see the profits they projected, or even just lose money altogether.

There are 4 specific types: strategic, compliance, operational, and reputational.

Strategic risk is the risk that a strategy...bombs. Say a new process just completely blows up...ruins inventory, for example. That's a loss incurred as a result of strategic risk, and it's run every time a new strategy is implemented (probably why businesses take too long to make changes).

Compliance risk is the threat the business might lose money due to not following rules. Marijuana is legal in some states, but not others, and some require cards or a doctors note...well, if a business operated in the marijuana oil business, and rules changed and they broke them, even accidentally...they could be fined.

Operational risk isn't as interesting as marijuana oil. It's the risk the company will incur a loss due to not operating, for busted equipment, striking employees, inclement weather, etc.

The last risk is reputational, and in the age of social media, it might be the one you're most familiar with. Brad's wife was fired from Cracker Barrel a few months ago. A man went onto the CB Facebook page and asked why they fired his wife. For some reason, it caught on. Memes abounded, casual references in comments on unrelated pages popped up, and the Cracker Barrel page was trolled by the masses. Everyone with a grudge came out in full swing.

Now, obviously, Cracker Barrel did not close or lose their business. But the episode did alter their reputation, and if they had been a smaller, less established business, it might have ruined them. If it had, that would be considered reputational risk.