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AOA sir please guide on one thing
Strategic risk we consider risk from external factor on our strategic direction and we look into PESTEL factors
For operational risk we look into internal weaknesses that effect our current strategies
Financial and environmental risks are separate from above.
Broadly, your categorisation of strategic risks as external and operational risks as internal is correct, but perhaps not foolproof. For example, exceptionally heavy rain could cause a factory to flood. That is an operational problem caused by an external factor.
PESTEL lists environmental influences (such as political changes) and the second ‘E’ is specifically for the environment (global warming, flooding, drought etc).
Financial risks can arise from both internal and external factors. Eg a rise in interest rate is external, but poor budgeting or poor trading because poor products were designed so that loans are not repaid as required are primarily internal faults.
or in other words if I say
if risk effect strategic direction of company that are strategic risks and operational risk only effect our daily day to day activities. we need to look into risk itself and then see its categorization. am I right?
That’s fine, though do not become obsessed with categorisation. It will not necessarily matter to a company’s future whether it suffers from a strategic or operational error. For example, making a manufacturing error in the construction of an aircraft engine (operational) could be as devastating to the company’s future as making an error by not developing electric engines (strategic).
If you discover a risk, labelling it strategic or operational will not really affect how you treat it.
The categories strategic, operational, financial etc should be used more as a check list: have you thought about strategic risks, operational type risks etc. How the risk is categorised should not affect its treatment – that will depend on the probability of the event and its effect.
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