Introduction
Adverse effects of internal and external nature always threaten every company. Some risks may not only impede operations or damage the reputation but can also lead to the inevitable liquidation of an entity. Therefore, strategic risk is the aspect that requires acute attention in any organization or business.
Discussion
Each company should address any possible strategic risks to prevent destructive consequences for its operations. Strategic risk means a particular event or decision that can impede the business strategy implementation or disrupt the achievement of core organizational goals, as well as a value proposition (Harvey et al., 2021; Deloitte, n.d.). On the one hand, such risks may arise from operational, technological, legal, security, or other internal difficulties. On the other hand, some external events, such as economic slowdowns or international trade wars, can also pose a strategic risk.
Deloitte, an English management consulting company, may be used as an example to illustrate its approach to explaining strategic risk and its management to its customers. For instance, in Deloitte, advisors believe that widely adopted enterprise risk management strategies often fail because they cannot help in predicting, measuring, and reducing strategic risks (Deloitte, n.d.). Besides, in the telephone conversation with one of the employees of the consulting company, he mentioned the case of Blockbuster, the former leader of the video rental segment, and why it collapsed. The reason was the improper assessment of strategic risk in the external context, which allowed Netflix to win.
Conclusion
Finally, considering strategic risks is one of the essential activities in all business entities. Since strategic risks can be both internal and external, companies need to keep abreast of events and take relevant measures. In view of the ever-changing business environment, some risk management strategies may not work, and thus only thorough planning and consideration of the specifics of a certain company can help to reduce strategic risks.
References
Deloitte. (n.d.) Strategic risk management in insurance. Navigating the rough waters ahead. Deloitte. Web.
Harvey, C.R., Rattray, S. and Van Hemert, O. (2021). Strategic Risk Management: Designing Portfolios and Managing Risk. John Wiley & Sons.