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In the specimen exam 1, the examiner mentions business risk as 1 out 4 possible answers to question 2a.
I could not find the wording business risk, but would this be equal or similar to the operational risk?
thanks!
FredrikBusiness risk relates to business activities, not the business’s finance.
It certainly includes operational risk but also includes strategic, compliance and reportimg risk (to use one classification). These are all areas where the business could ‘mess up’, be messed up.
On top of usiness risk there is financial risk. So high gearing introduces finance risk and this enhances the effect of any business risk.
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