When a company sets out to develop a new business strategy, they must consider the risks associated with its implementation. These risks can range from economic uncertainty and competitive factors to delays in the completion of the project and loss of key personnel. Companies may also face legal or compliance risks if they violate government laws or regulatory standards. For example, if a company does not comply with environmental regulations, such as those related to pollution and hazardous waste, they may face a compliance risk. Deloitte (201) expands on this definition of strategic risk and states that these risks can also be “created by the business strategy and strategic objectives of an organization”.
Regulatory and legislative factors related to governance, risk and compliance strategies in general are also driving companies to focus on strategic risk. New government regulations can make it difficult for a small business to implement their strategies. However, by taking a dynamic approach to implementing the strategy, companies and financial managers can increase the chances of successfully executing the strategy and, potentially, reduce the chance that they will not translate, adapt and maintain the new strategy effectively. Business risks range from financial and reputational risks to compliance and cybersecurity risks, all of which can seriously affect a company's strategic plans if business leaders don't take steps to mitigate them. In today's hyperconnected world, risk evolves faster than companies can design strategies to address it. Louisot and Ketcham (201) state that strategic risks are “associated with adopting or not adopting the right strategy for an organization in the first place or, once adopted, with not adapting the chosen strategy in response to competition or other forces”.
Business owners face a variety of business risks, including financial, compliance, cybersecurity, operational and reputational risks. To protect their companies from these threats, business leaders must take steps to identify potential risks and develop strategies to mitigate them. This includes conducting regular risk assessments to identify potential threats and developing plans to address them. Additionally, companies should ensure that their employees are aware of potential risks and have the necessary training to respond appropriately. Finally, companies should review their strategies regularly to ensure that they are still relevant in light of changing market conditions. By understanding the risks associated with implementing a new business strategy and taking steps to mitigate them, companies can increase their chances of success.
By taking a proactive approach to risk management, businesses can protect themselves from potential threats while still achieving their strategic goals.