Business risk refers to different market and environmental uncertainties that could positively or negatively affect achievement of strategic aims and objectives. They examples of business risk are financial, health & safety, credit, operational, insurance, compliance, political, economic, legal and technological risks. The strategy planning process should clearly identify and elaborate on any associated business risks to develop a comprehensive ‘Enterprise Risk Management’ (ERM) system, which would help grappling with risks and implementing mandatory strategies for risk mitigation. Indeed, the organizational risk management is not just individuals’ responsibility because the fragmented approach is unviable in 21st century amid innovation, sustainability and globalization challenges. Rather, ERM is a part of strategic planning where all organizational partners and key stakeholders must brainstorm, analyze, rank and measure business risks to be incorporated in an official strategic plan for business development. In other words, the strategic planning would be incomplete and ineffective if it lacks risk management. Taking into consideration global market challenges and dynamics, a manager may decide taking risk for expansions and developments in strategic planning when market trends are moving in the positive direction. For example, the economic recovery from recession becomes evident due to positive trends in employment statistics, LSM manufacturing, services sectors, property prices and aggregate consumption; therefore, the manager could risk new investments on positive economic signs despite slow recovery. Some methods better suited to certain types of change than others as they are easy to implement and produce desirable results (Wheelen & Hunger, 2010).
Reference
Wheelen, T. L., & Hunger, D. J. (2010). Concepts in Strategic Management and Business Policy Achieving Sustainability. Upper Saddle River, New Jersey: Prentice Hall, Pearson Education
