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CMA Final · Entrepreneurship and Startup · Risk Management Strategies

Which of the following is the best example of a startup's strategic risk, as distinct from operational risk?

A competitor's disruptive technology that makes the startup's model obsolete is a strategic risk, because it threatens the business direction and long-term viability. Machine breakdowns, data entry mistakes and server outages stem from internal processes, people or systems, so they are operational risks.

  1. AA key machine breaking down during a production run
  2. BAn employee entering wrong invoice data
  3. CA competitor launching a disruptive technology that makes the startup's business model obsoleteCorrect
  4. DA server outage lasting two hours

Explanation

Strategic risk concerns threats to the business model or long-term direction, such as disruptive competition or market shifts. Machine breakdown, data entry errors and short server outages arise from internal processes, people or systems and are operational risks.

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