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Strategic risk refers to the potential negative impact on an organization's ability to achieve its business objectives, due to factors such as business model inefficacy, decision-making flaws, or changes in the external environment.

The components of strategic risk include changes in the competitive landscape, shifts in market demand, technological innovations, and regulatory changes that can affect business strategies.

To assess strategic risk, companies use tools like SWOT analysis, scenario planning, and competitor analysis to understand potential risks and their impact on the organization's strategy.

A Strategic Risk Management Framework involves identifying risks, assessing their potential impact, developing strategies to mitigate them, monitoring for changes, and creating action plans for risk events.

Addressing strategic risk involves balancing the potential risk with the reward of strategic decisions, ensuring that the risk taken is proportional to the potential benefits for the company.

Strategic planning must integrate risk consideration to anticipate and prepare for potential disruptions, enabling proactive rather than reactive strategies.

Senior management and the board are critically involved in strategic risk management, setting the tone for risk culture and ensuring organizational alignment with risk appetite and strategy.

Building a risk-aware culture involves educating employees about strategic risks, encouraging open communication about risks, and establishing clear policies for risk management.

Companies must align their risk appetite, the amount of risk they are willing to accept, with their overall strategic objectives to ensure coherent decision-making and risk exposure.

Technological advancements can introduce new strategic risks, such as becoming obsolete. Continuous innovation and the incorporation of robust technology strategies are vital.

Changes in laws and regulations can significantly impact strategic risks, necessitating ongoing review of compliance strategies and alignment with legislative trends.

Globalization increases exposure to strategic risks from different markets and cultures. Understanding and managing these risks is crucial for international operations.

The prevailing economic climate affects strategic risk through business cycles, inflation trends, and economic stability, implying the need for adaptable strategic planning.

Regularly challenging and testing the assumptions underlying strategic choices can identify potential strategic risks and guide corrective measures.