Today’s global market is characterized by fluctuating trends and evolving compliance requirements. These result in uncertainties that increase vulnerability of organizations to strategic risks, threatening resilience and growth.
To ensure business continuity, organizations are turning to strategic risk management. A survey by Boston Consulting Group reflects this, revealing that 79% of executives have already developed their strategies. Despite the high number, only 71% say they are prepared to execute them. The survey uncovers a gap between planning and action—something that can be bridged by integrating risk management in business strategies.
If you are struggling with strategic risks, this guide is for you. This article breaks down the basics of strategic risks, including definition, different types, and examples. Additionally, access a list of best practices and practical tips on how to effectively overcome them.
What is strategic risk?
Strategic risks are factors or events that affect an organization’s ability to achieve growth objectives. They emerge from both internal and external environments, and are often the result of poor decision-making, ineffective forecasting, or market uncertainties.
In recent years, several companies in the United States failed to overcome strategic risks. For example, the finance sector had witnessed its sixth-largest bank collapse since 2010 when First Republic Bank closed due to a severe crisis in 2023. In the beauty industry, The Body Shop ceased US operations in 2024 due to declining market shares.
These strategic risk examples reinforce the importance of aligning risk management with overall business strategy. By operationalizing risk processes, the board can detect risk early and implement strategies before it causes disruptions.
Nine Examples of Strategic Risk and How to Overcome Them
Strategic risks manifest in multiple areas and have varying nuances that leaders must understand. Below are the nine strategic risk examples, along with tips on how organizations can address them.
1. Economic Risk
Businesses witness sudden shifts in market demand, pricing, and compliance in times of market volatility. These changes lead to inflation in market prices and interest rates, which can strain financial health and disrupt supply chains, threatening overall stability.
How to Overcome:
Perform pattern analysis to identify factors driving market volatility. By enhancing situational awareness, organizations can anticipate impact and develop mitigation strategies more precisely. More importantly, it improves agility, enabling them to adjust direction during sudden market shifts.
2. Competitor Risk
Competitor risks occur when businesses fail to differentiate themselves from competitors. For example, companies must avoid relying on the same pricing models or marketing campaigns as their peers. Additionally, pursuing rebranding without a SWOT analysis and market research exposes businesses to greater competitor risks, which could threaten identity and market share.
How to Overcome:
Conduct competitor research and SWOT analysis before any strategic decision. By diving deep into market and customer behavior, leaders can identify key opportunities to highlight as they refine value propositions and strengthen customer loyalty.
3. Financial Risk
Businesses are inherently prone to financial risks. They often result from poor investment decisions, weak internal controls, or unprofitable mergers or acquisitions. While their impacts can be destructive, financial risks are avoidable provided that businesses have proper financial systems, healthy cash flow, and managed credits.
How to Overcome:
Leverage technology when handling such a complex domain like finance. Equip teams with digital tools that allow them to monitor key financial metrics in real-time and streamline related processes such as risk management and response planning. Additionally, make financial training part of the strategy to keep everyone aligned with financial goals.
4. Change Risks
Change risks occur when stakeholders resist organizational change. A good example of this is digital transformation.
Research reveals that 94% of executives in the U.S. and the UK already have a digital transformation strategy, while some still have unclear plans. The lack of strategy may cause them to fall behind, affecting operational efficiency, customer satisfaction, and market share.
How to Overcome:
Engage stakeholders in discussions by presenting feasibility and risk assessments. At the same time, set realistic expectations on the potential benefits and drawbacks to reassure them that the plan aligns with the strategic goals.
5. Governance Risk
Poor board governance is characterized by non-compliance, ineffective oversight, inconsistent policy implementation, and unethical decision-making. This weakens the governance structure and increases exposure to compliance violations.
How to Overcome:
Establish clear governance practices and require leaders to act as stewards. Reevaluating bylaws and articles of association (AOA) would also help identify which policies work and which should be amended.
6. Operational Risk
Operational risks encompass issues that often cause business activities to be delayed or stopped. These risks include weak internal processes, human error, system breakdowns, supply chain disruptions, and force majeure.
How to Overcome:
Assess risks and categorize them according to their likelihood and severity. Grouping them in this way helps the board prioritize which ones require immediate action to avoid operational disruptions.
7. Political Risk
Geopolitical tensions and government transitions are two common causes of political risks. According to C-Suite Outlook 2025, the intensifying trade wars, foreign cyberattacks, and rising tensions in the Asia-Pacific are huge concerns for global executives.
Failing to navigate these can lead to supply chain disruptions, hinder international expansion, and increase regulatory burdens.
How to Overcome:
Organize a task force dedicated to overseeing Political Risk Management (PRM) initiatives. The team should focus on managing political threats, including developing and presenting mitigation strategies to the board.
8. Regulatory Risk
Non-compliance with industry regulations, international standards, and government policies subjects organizations to penalties and legal consequences. Without proper compliance management, this can derail business growth and deplete finances.
How to Overcome:
Require teams to document compliance efforts and stay abreast of regulatory changes. By distributing accountability to team members, organizations can improve transparency and prevent negligence.
9. Reputational Risk
Factors that threaten an organization’s good standing and public image are called reputational risks. They occur in various ways: through the organization’s direct actions, the indirect actions of employees, or through associations with questionable business partners.
How to Overcome:
Prevent misconduct and maintain trust by cultivating ethical practices and high standards. Additionally, boards should also develop reactive strategies to ensure business continuity and healthy customer relationship management.
What is strategic risk management?
Strategic risk management (SRM) is a comprehensive process of analyzing and mitigating any risk that could impact how an organization executes its business strategy. Unlike traditional risk management, which mostly prevents financial losses, SRM is focused on understanding risks from every angle.
It’s a continuous cycle of:
- Identifying the nature of risks
- Assessing potential impact on the business
- Quantifying risks per category
- Facilitating scenario assessment
- Developing holistic mitigation plans
The key to a successful SRM is integrating it into the overall strategic planning process. It’s important for the board to consider the influence of internal and external environments before finalizing a strategic plan.
Related Reading: A Guide to Enterprise Risk Management Certifications
Why should organizations prioritize strategic risk management?
PwC shared in one of its surveys that SRM enhances stakeholder confidence and supports faster growth. Learn the other positive impacts of SRM on businesses through the list below.
1. Data-driven decision-making
Systematic data handling and analysis are essential in risk management. SRM implements a structured approach that makes assessments a lot easier, providing the board with actionable insights for more effective decision-making.
2. Increase market competitiveness
SRM uncovers profitable opportunities that may be overlooked by traditional risk processes. Its framework serves as a guide for strategy development, helping teams adapt quickly during market shifts or operational disruptions. If done right, this helps boost competitiveness and strengthens market position.
3. Enhance financial stability
Financial management is included in SRM, enabling the board to improve financial statements and prevent financial risk at once. With stronger financial controls, organizations become more flexible and confident in managing resources and exploring investment opportunities.
4. Protect brand reputation
Beyond its benefits to finance and operations, SRM also prevents organizations from getting dragged down by PR crises. The framework urges crisis response planning that would become helpful in case organizations face negative media coverage, social media backlash, or legal scandals.
Best Practices for Identifying and Managing Strategic Risks
Ensure SRM strategies are holistic and foolproof so they will be reliable whenever there are emerging risks. To achieve this, organizations must follow these best practices:
1. Assemble a cross-functional team
First, you must organize a team consisting of the board, executives, and department heads. Their expertise brings in diverse perspectives that help execute a more comprehensive risk management. By covering all aspects of the organization, the risk response team can ensure that no threat is overlooked.
2. Conduct regular strategic risk assessments
Schedule risk assessments throughout the year to examine the impact of changing trends and regulatory requirements. Most organizations conduct these once or twice annually, while others conduct them more often. The frequency depends on the company’s size, industry, and overall risk profile.
3. Engage with stakeholders
Identify stakeholders who will be affected by risks and properly manage their expectations. This may involve both internal and external stakeholders like employees, managers, customers, suppliers, and regulators. By promoting open communication, you can build trust and develop a more realistic response plan.
4. Monitor risk trends and market shifts
Stay updated on risk trends and market shifts by joining relevant groups and industry forums, subscribing to market intelligence reports, and leveraging data analytics tools. Additionally, plan risk training for the team to ensure everyone remains aligned with organizational goals.
5. Integrate technology into strategic risk management
Leverage dashboards and AI-powered tools to streamline risk management, from data gathering and analysis to forecasting. To empower boards in risk oversight, explore management platforms like board portals for clearer communication, reduced administrative burden, and faster decision-making.
What are the technological trends shaping strategic risk management?
The rise of AI and digital tools has been a significant force reshaping strategic risk management in 2025 and in the future. These technologies empowered organizations to take a more bold approach in risk management by integrating predictive analytics and centralized risk dashboards.
Discover how they work and their benefits.
Predictive Analytics
It’s common knowledge that markets are seeing a growing demand for AI technologies. In 2025, 33.5% of Fortune companies have turned their focus from LLM to broad AI and big data. Reports indicate that these companies are now leveraging advanced AI capabilities to enhance risk processes, particularly in forecasting, pattern analysis, and system optimization. This shows that markets are becoming more open to exploring other AI offerings, with organizations shifting priorities from generative AI to broad AI.
Centralized Risk Assessments
Organizations are recognizing the potential of AI-powered dashboards for risk monitoring across business functions. These platforms consolidate collective intelligence in one view, becoming a single source of truth for decisions. AI risk dashboards ensure instant access to risk updates, enabling organizations to develop mitigation strategies on time.
Frequently Asked Questions on Strategic Risk
Is it possible to turn risks into business opportunities?
Yes. Organizations can transform risks into business opportunities using proactive practices. By establishing a robust risk management workflow, teams can assess and mitigate developing threats faster than competitors, therefore gaining a strategic advantage.
What industries are most exposed to strategic risks?
While risks are ever present across industries, there are some like finance, healthcare, and technology that experience them more often. Compared with others, these industries deal with more critical topics, including data privacy, regulatory compliance, and cybersecurity.
Empower Your Board to Stay Ahead of Risks with Convene
One of the biggest struggles organizations face in risk management is communication. Some still rely on outdated tools or systems, which often lead to miscommunication and delayed response. With the fast pace at which markets are evolving today, it’s time to stay ahead of risks using modern tools that help decision-makers align on objectives and respond to escalating risks faster.
This is where Convene board portal can help you. Built with the requirements of modern boardrooms in mind, Convene enhances engagement among directors for faster decision-making. It boasts beginner-friendly tools and top-notch security to ensure boards receive the right information at the right time.
Convene offers smart and secure workflows that allow boards to:
- Protect confidential data at all times, enabling directors to share files without risks of data leaks or unauthorized access using role-based permission controls.
- Reduce meeting preparation time with intuitive tools such as agenda builder, automated notifications, annotations, and real-time document syncing so boards can focus on high-impact discussions.
- Simplify decision-making by summarizing lengthy minutes or other board resources into actionable insights using AI-powered tools.
- Strengthen cybersecurity resilience using enterprise-grade security features, including data encryption and multi-factor authentication.
Unlock the power of intelligent board governance today—contact our sales team to schedule a Convene demo.
Jean is a Content Marketing Specialist at Convene, with over four years of experience driving brand authority and influence growth through effective B2B content strategies. Eager to deliver impactful results, Jean is a data-driven marketer who combines creativity with analytics. In her downtime, Jean relaxes by watching documentaries and mystery thrillers.
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