Managing risk

Strategic and compliance risks

Strategic risks are those risks associated with operating in a particular industry.

They include risks arising from:

• merger and acquisition activity
• changes among customers or in demand
• industry changes 
• research and development

For example you might consider the strategic risks of the possibility of a US company buying one of your European competitors. This could give the US company a distribution arm in the UK. In this situation you might want to consider:

• whether there are any US companies which have the cash/share price to do this
• whether there are any European competitors who could be a takeover target, perhaps because of financial difficulties
• whether the US company would lower prices or invest more in research and development 

Where there's a strong possibility of this happening, you should prepare some sort of response.

Compliance risk

Compliance risks are those associated with the need to comply with laws and regulations. They also apply to the need to act in a manner which investors and customers expect, for example, by ensuring proper corporate governance.

You may need to consider whether employment or health and safety legislation could add to your overheads or force changes in your established ways of working. For advice on how to manage health and safety risks, read our guide on how to set up a health and safety management system and find advice on minimising workplace risks on the Healthy Working Lives website - Opens in a new window.

You may also want to consider legislative risks to your business. You should ask yourself whether the products or services you offer could be made less marketable by legislation or taxation - as has happened with tobacco and asbestos products. For example, concerns about the increase in obesity may prompt tougher food labelling regulations, which may push up costs or reduce the appeal of certain types of food.

Subjects covered in this guide

• Introduction
• The risk management process
• The types of risk your business faces
• Strategic and compliance risks
• Financial and operational risks
• How to evaluate risks
• Use preventative measures for business continuity
• How to manage risks
• Choose the right insurance to protect against losses
• Here's how risk assessment helped my business

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