This is the risk which affects the ability of an organisation to achieve its strategy and strategic objectives as a result of specific decisions or a lack of decisions. It is impacted by not identifying, assessing and managing risks and uncertainties, affected by internal and external events.
This risk can emanate from socio economic or regulatory changes, balance sheet and financial resource limitations or HR/People skill limitations.
This risk affects the ability of an organisation to achieve its strategic objectives. Not having a clear or definitive strategy can severely impact operations, financial performance and ultimately the balance sheet and viability of the organisation.
Nothing is more critical to the long-term success of a business than the decisions of which markets to operate in, how to structure, operate and fund the business. Long term planning (starting with good research) and constantly updating your strategy are vital to your success.
Strategic risk management typically starts with the owners and managers doing a high-level assessment of the industry they operate in to assess the current competitive landscape and the opportunities and threats in the future. The result is a clear plan of what the business plans to do in the coming years and how this will be reviewed and adapted.