Operating risk

Operating risk is the level of uncertainty associated with the core operations of a business. There are a number of possible causes of operating risk, including the following:

  • The variability of demand for products
  • The variability of prices for supplies
  • The risk of product obsolescence
  • The risk of equipment obsolescence
  • The risk associated with changes in the management team
  • The risk of failed internal processes
  • The risk of incompetent personnel
  • The risk of employee fraud

Operating risk does not include any risks associated with the financing of a business.