The risk associated with an enterprise's future business plans and strategies.

• A. Operational risk
• B. Strategic risk
• C. Project risk
• D. Risk

Answer: (B)

Strategic risk is the risk associated with an enterprise's future business plans and strategies. It arises when the chosen direction—such as entering new markets, changing product lines, adopting a new business model, or pursuing mergers and acquisitions—may not deliver the expected benefits because of changes in the external environment or weaknesses in execution. This can include shifts in customer demand, competitive pressure, technological advances, regulatory changes, or macroeconomic factors that undermine the viability of the strategy or its implementation.

This type of risk sits at the top level of risk management because it directly affects the organization’s ability to achieve its long-term objectives. By contrast, operational risk relates to daily operations, processes, people, and systems failures that disrupt normal activity. Project risk concerns risks within a specific initiative or project with defined scope, schedule, and resources. The term risk alone is too vague to capture the strategic angle. To manage strategic risk, organizations monitor the external environment, test assumptions through scenario planning, maintain governance and flexibility in strategy, and align resources to adapt as conditions change.