4 basic types of business risks in the enterprise

People are almost always an underlying factor in positive or negative outcomes for an enterprise. Risks to people can affect — or create — virtually any other risk.

Market risks can evolve from someone making a poor decision on how to approach the development and release of a new product, resulting in a product that doesn’t sell, that is inappropriate for the market, released too early or too late, priced too high, poorly designed or doesn’t perform as advertised. Competitive risks could be exacerbated if another firm makes better decisions and achieves a market “win” over its competitors.

Compliance risks evolve when someone within an organization accidentally or deliberately doesn’t adhere to specific regulations, standards or other benchmarks, potentially resulting in legal risks, litigation, costly penalties and bad publicity that could morph into reputational risks.

Without enough people, a business would have difficulty functioning and even cease to exist. The COVID-19 pandemic has shown the types of business risks that people can bring to an organization. Remote work, for example, evolved practically overnight as a principal strategy to address the risks of losing employees during the pandemic. Media stories of businesses suffering and teetering on the edge of failure probably numbered in the tens of thousands.