Types of risk

In this lesson

1. 0:00 Identification, assessment and measurement of risk
2. 0:38 What is risk and why it matters
3. 1:39 Upside risk and favourable outcomes
4. 2:41 Downside risk and adverse events
5. 4:00 Speculative risk versus pure risk
6. 5:03 Risk management and organisational strategy
7. 6:19 Why organisations manage risk
8. 7:51 The risk management process steps
9. 10:00 Enterprise Risk Management and COSO framework

About this lesson

The lesson covers four key risk types: upside risk (outcomes better than expected), downside risk (outcomes worse than expected), speculative risk (possibility of both gain and loss), and pure risk (possibility of loss only). You'll explore how each type applies differently in business contexts, from product launches to natural disasters, and why SBL questions typically focus on identifying downside risks when evaluating strategic options. You'll also discover how risk management connects directly to organisational strategy. Rather than eliminating risk—which would mean not being in business at all—effective organisations identify, analyse, evaluate and respond to risks in a structured way. This integrated approach helps protect assets, improve decision-making, enhance operational efficiency and safeguard reputation whilst still pursuing strategic goals. The lesson introduces the risk management process framework and Enterprise Risk Management (ERM), showing you the key steps: identify risks, analyse likelihood and impact, evaluate against the organisation's risk tolerance, respond appropriately, and monitor controls. Understanding this process will help you tackle SBL questions that ask you to identify risks in case study scenarios and recommend how organisations should manage them.

Duration: 12m