ERM Concepts [29]

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Bullet points include: No consistency in risk categorisation, depends on perspective/background of writer, e.g. Market risk: in finance primarily relates to (external) financial markets, in business may relate to ability of firm to compete effectively in its chosen markets. Earthquake risk: external event for most entities, but an insurance risk for (re)insurers. Business risk: could mean totality of risks faced by business, or just the subset specific to the type of business carried out by the firm (e.g. insurance risk for an insurer). Credit risk: does it include or exclude risk of changes in market observed credit spread (and if the former, how much of this risk is actually liquidity risk?)

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