What is Business Risk?
Business risk is the exposure a company has to factors that may cause earnings to fall short of expectations or threaten its ability to operate. It covers strategic, operational, financial, compliance, and reputational risks.
How It Works
- Identify and categorize risks across strategic, operational, financial, and compliance domains.
- Score each by likelihood and impact.
- Mitigate through controls, insurance, hedging, or risk transfer.
Saudi Context
Saudi businesses face concentrated risks tied to oil cycles, regulatory shifts (ZATCA, SAMA, CMA), Saudization quotas (Nitaqat), and Vision 2030 timelines. Listed firms publish an annual risk-management section in line with CMA rules.
Example
A Saudi engineering contractor lists project execution delay, raw material price volatility, and a heavy reliance on three government clients as its top three risks in its annual report.