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57 Examples of Risk Costs

 , May 07, 2023
Risk costs are the losses related to risks that occur and the costs of managing risk. The following are examples of both types of risk cost.

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
Note: avoid treating human impacts as purely financial as this is cold logic that is unfair.

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
Efforts to mitigate risks can create larger secondary risks than the original risks.
Next read: Examples of Cost of Risk

Risk Analysis

This is the complete list of articles we have written about risk analysis.
Acceptable Risk
Comparative Risk
Cone Of Uncertainty
Cost Of Risk
Extreme Value Theory
Hazard
Impact Analysis
Moment Of Risk
PESTEL Analysis
Probability-Impact Matrix
Qualitative Risk
Relative Risk
Revenue Impact
Risk Analysis
Risk Capacity
Risk Characteristics
Risk Costs
Risk Decision
Risk Estimates
Risk Evaluation
Risk Exposure
Risk Identification
Risk Impact
Risk Management
Risk Matrix
Risk Measures
Risk Objectives
Risk Perception
Risk Planning
Risk Probability
Risk Profile
Risk Register
Risk Treatment
Risk Triggers
Risk Value
Risk-Reward Ratio
Threat
Uncertainty
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Risk Planning

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