Question

Define five types of risks and explain how they have affected companies return during this COVID-19 period?

Answer 1

Five types of risks which companies have faced during COVID-19 are:

1. Strategic Risk - Companies have their own strategy to meet future goals and growth perspective. But due to COVID-19, there was a shift in demand which impacted the strategy of many companies and made it vulnerable by increasing their difficulty to achieve their goals.
2. Compliance Risk - Every company has to abide by certain laws and regulations made by the judicial bodies of the country. There have been many alterations in recent times in working hours, workforce, and work from home strategy implementation. So the company has to follow these rules immediately.
3. Operational Risk - It refers to the unexpected failure in the company's day-to-day operation which has been caused by a reduction in the workforce as lockdowns were imposed in most parts of the world. So many companies were closed for several months and when started working, they were working at their half or 25% efficiency
4. Financial Risk - It is basically the top line and bottom line not performing according to the plan. Due to COVID-19 and lockdown, there was a huge change in demand which has affected the revenue stream of many companies as the consumption pattern changed drastically.
5. Reputational Risk - COVID-19 has shown the path of bankruptcy to many companies. There were several layoffs done by large-cap, midcap companies. Hence it has impacted the reputation of many organisation.