ACC 112 | SAS 14 | Types of Risk

Business Risk

uncertainty on rate of return caused by nature of business

Default Risk

probability that some or all initial investment will not return

Financial Risk

financial leverage cause by firm’s capital structure and financing source

Interest Risk

fluctuation in interest rate due to fluctuation on the value of investment.

Liquidity Risk

uncertainty of selling the investment quickly for cash

Management risk

risk faced by investors from the management decision and BOD

Purchasing power risk

decline of investment as result of inflation (deflation)

Product Risk (Market Risk)

obsolescence

Product Risk (Market Risk)

R&D

Product Risk (Market Risk)

packaging

Product Risk (Market Risk)

warranties

Competitor Risk (Market Risk)

pricing

Competitor Risk (Market Risk)

market strategy

Competitor Risk (Market Risk)

marker share

Operations risk

process stoppage

Operations risk

health & safety

Operations risk

integrity

Operations risk

technological obsolescence

Operations risk

management fraud

Operations risk

employee fraud

Operations risk

illegal act

Financial Risk

interest volatility

Financial Risk

derivative

Financial Risk

viability

Financial Risk

foreign currency

Business Risk

regulatory change

Business Risk

regulation

Business Risk

credit rating

Business Risk

business interruption

Business Risk

political

Non-Financial Risk

Operational risk

Non-Financial Risk

regulatory risk

Non-Financial Risk

environment risk

Non-Financial Risk

Integrity risk

Non-Financial Risk

Leadership risk

Risk Avoidance

avoidance of activity that could carry risk which means losing out on potential gain that accepting risk may have allowed

Risk Reduction

optimizing risk by finding balance between the negative risk and benefit of the operation or activity; between risk reduction and effort applied

Risk Sharing

sharing with another party the burden of loss or benefit of gain

Risk Retention

accepting loss or benefit of gain when occurs