ERM Glossary: Business Risk

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Business risk is defined by Lam (2014) in two different ways:

(a)    The risk of loss corresponding to unexpected changes in the firm’s competitive environment, or to trends that damage the business franchise or operating economics.

(b)    The risk that annual financial and operating results may not meet management and stakeholder expectations.

For a firm, reputational risk can be thought of as an example of business risk.

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