Which term best describes the risk tied to a company's plans and strategies?

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

Answer: (A)

Strategic risk is the risk tied to a company's plans and strategies. It covers the possibility that chosen directions, major initiatives, or resource allocations may not achieve objectives because of shifts in markets, competition, technology, or regulatory changes, or because the organization lacks the capabilities to execute the plan. When the uncertainty centers on whether the overall strategy will succeed, strategic risk is the right framing. In contrast, a policy is simply a rule or guideline that governs behavior, not a source of risk from strategic choices. A general term like risk is too broad and doesn’t pinpoint the source as strategy. Operational risk deals with day-to-day operations, processes, people, or systems, not the long-term strategic direction.