Risk Losses
Risk is the potential for a negative outcome. Where risks occur they become issues that may have a variety of costs. These include financial costs such as lost revenue and non-financial costs such as injuries that have both a financial and human impact.Business interruption | Business normalization costs – restarting stopped processes |
Business recovery costs | Compliance costs |
Contract penalties | Customer compensation |
Customer returns | Damage to brand |
Damage to ecosystems | Damage to facilities |
Damage to infrastructure | Damage to reputation |
Decrease in market share | Decreased competitiveness |
Decreased quality of life | Decreased resilience |
Destruction of data | Disruption of business operations |
Employee turnover | Extraordinary expenses such as consultants to help recover |
Financial costs such as increased interest rates | Financing costs |
Increased insurance premiums | Injuries |
Insurance deductibles | Legal expenses |
Legal liability | Loss of creditors |
Loss of customers | Loss of inventory |
Loss of investors | Loss of life |
Loss of opportunity | Loss of partners |
Loss of productivity | Loss of property |
Lost income | Medical expenses |
Notification costs | Opportunity costs |
Physical damage | Public relations costs |
Reconstruction costs | Reduced revenue |
Regulatory penalties | Remediation costs |
Repair costs | Replacement costs |
Supply disruptions |
Costs of Managing Risk
The costs of managing risks include any work that goes into risk mitigation. Also include the secondary risks that you create by managing risks and the opportunity cost of risk avoidance. The general administration costs related to risk management are also risk costs.Cost of secondary risk | Hedging costs |
Insurance costs | Opportunity costs |
Risk management consulting | Risk management overhead |
Risk management technology | Risk mitigation costs |
