Strategic risks are a type of corporate-level risk that can have a major impact on the development and implementation of an organization's strategy. As described by Roberts, Wallace, and McClure (200), these risks can be uncertainties or opportunities and are the key issues of concern to the board of directors. Louisot and Ketcham (201) further explain that strategic risks are associated with the adoption or failure to adopt the right strategy for an organization, or the failure to adapt the chosen strategy in response to competition or other forces. In other words, strategic risks not only influence the likelihood that an organization will achieve its strategy, but also arise from the strategic decisions themselves. In order to avoid the many risks that can occur in a company, it is important to develop processes to identify, analyze, and monitor strategic risks.
This includes employee training, background checks, safety checks, equipment maintenance, and physical facility maintenance. Additionally, it is essential to establish and maintain appropriate risk assessment procedures. Data analysis allows companies or organizations to prioritize risks in a profile, evaluating the most important risks along with their likelihood of occurring and the related consequences. Once strategies have been defined, this serves as the basis for a risk assessment template and allows future modifications to be made. Auditing and risk management solutions can help protect businesses, engage with customers, and have more strategic influence.
When it comes to managing strategic risk, it is important to pay close attention to the organization's strategy and objectives, have comprehensive oversight of potential risks, and be proactive in adapting to changes and responding effectively. The 5-step process for identifying, evaluating, treating, monitoring, and reporting should be followed when managing strategic risks. This includes developing a plan that is adopted as the culmination of the entire strategic risk assessment process. Once a plan is adopted, strategic risk cannot be managed unless the action plan is communicated and mobilized. Risk management is an essential part of any successful business strategy. It is important for organizations to identify potential risks before they become problems.
By understanding potential risks and developing processes to identify, analyze, evaluate, treat, monitor, and report them, organizations can ensure that their strategies are successful and their businesses remain competitive. Organizations should also consider investing in auditing and risk management solutions that can help them identify potential risks before they become problems. Additionally, organizations should ensure that their employees are trained on how to identify potential risks and respond appropriately when they arise. By following these steps, organizations can ensure that their strategies are successful and their businesses remain competitive.