Question

The use of risk quadrants to identify and categorize risk can provide a framework for holistic risk identification. Which quadrant includes risks such as loss of production due to a key supplier not delivering raw materials or a mechanical breakdown of equipment?

Answer 1

Answer:

The options are given below:

A. Hazard risk

B. Strategic risk

C. Operational risk

D. Financial risk

The correct option is C. Operational risk

Explanation:

Operational risk refers to the possibility of incurring losses due to any or a combination of the following:

• loss of production
• breakdown of equipment
• errors by employees
• systems failures
• criminal activity
• catastrophic events
• internal and external fraud
• failure to adhere to internal policies
• political upheavals
• computer hacking
• any event that disrupts business processes.

The list is endless, as there are countless internal and external forces that constitute risk(s) to a business.

Answer 2

Answer:Operational risk

Explanation:

Operational risk is the possibility of loss which can result from inadequate or failed procedures, systems or policies. Employee errors, Systems failures,Fraud or other criminal operational risk is any event that is capable of disrupting business processes.

Therefore,loss of production due to a key supplier not delivering raw materials or a mechanical breakdown of equipment will affect the business process ,so we classify it as operational risk .