Potential Risk

Posted in Operations and Supply Chain Terms, Total Reads: 891
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Definition: Potential Risk

Potential risk refers to any risk associated with an action that is possible, in certain circumstances. A risk refers to a threat or damage that may occur in operations of a business. When a business firm undertakes any operations within a particular industry and in specific markets, they face potential risk.


Potential risk could be any type of risk that is possible for a business like systemic risk, arising from systems, or financing risks, due to finance problems, or even operational risks, occurring due to human error and failure of internal procedures of the organization.


Example

- Industries in a capital intensive industry face greater potential risk in finance.

For instance – Airlines, shipping industries


- Industries that depend heavily on human capital face greater potential risk in operations.

For instance – Services like restaurants


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