CRISC Certified in Risk and Information Systems ControlInformation Technology and SecurityMedium
A global manufacturing company is expanding its operations into new markets. The company's risk management team is tasked with identifying and assessing risks associated with this expansion, including geopolitical instability, regulatory compliance in new regions, and supply chain disruptions. Which type of risk is MOST prominently being addressed by the risk management team in this scenario?
- AOperational Risk
- BStrategic Risk
- CFinancial Risk
- DCompliance Risk
Show answer & explanationAnswer & explanation
Correct answer: B. Strategic Risk
Expanding into new markets is a fundamental business decision that directly impacts the company's long-term objectives and direction. Risks like geopolitical instability and regulatory compliance in new regions are strategic in nature, as they can affect the achievement of organizational goals.
Why the other options are wrong
- A. Operational risk focuses on day-to-day processes, systems, people, and external events, not typically high-level market expansion.
- C. Financial risk relates to monetary losses, which can be an *outcome* of strategic risks, but not the primary type of risk being assessed here.
- D. Compliance risk is a component of strategic risk in this context, but 'Strategic Risk' encompasses the broader impact on achieving organizational goals.
Strategic Risk
Risks that affect an organization's ability to achieve its overall goals and objectives, often related to major business decisions, market changes, or competitive landscape.
- Impacts long-term organizational success.
- Often arises from business decisions, market conditions, or external environment.
- Can include risks like reputation, regulatory changes, or competitive pressures.
Memory trick: Operational, Strategic, Financial, and Compliance are the core risks.