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58 Risk Examples

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A risk is a potential for a loss. It is an inescapable aspect of business that is a central consideration in decision making, strategy, planning, projects and day-to-day operations. Risk is managed by a process of identifying, treating and monitoring potential losses. The following are common types of risk each with an illustrative example.

Issue Clearing

A project fails when political infighting is distracting to the project team. Minor requirements clarifications become large scale issues that run for months.


A software developer estimates a task will take 3 days that ends up taking 60 days.

Scope Creep

Broad and conflicting interpretations of scope cause a project to run overbudget.

Resistance to Change

Insiders at a firm fear that a new technology will make their jobs more difficult and passively resist its implementation.


Integration of technical components fails requiring a redesign.


The primary architect for a project suddenly quits.


A technology vendor fails to meet the terms of a contract resulting in downtime for critical systems.


A dispute with a partner causes distractions, negative behavior and a work slowdown.

Project Facilities

A project assumes that office space will be available for a project team. In reality, the firm is completely out of space with a 3 month wait for desks and meeting rooms used as work space.


A cloud platform upgrade is delayed 4 months, causing a crisis for a variety of software projects built on the new technology.


A machine breaks down when the only person who knows how to fix it is on extended sick leave.


A website redesign causes customer complaints to spike 300% due to usability issues.


The architecture delivered for a project is incompatible with the non-functional requirement that a platform be highly resilient with five nines uptime.


An assembly line is shut down for hours due to a power outage and failure of backup power.

Health & Safety

Employees on a business trip in a foreign country get into an accident driving a rental car.

Benefit Shortfall

A new product fails on the market due to poor product differentiation in a crowded market.

Exchange Rates

A firm in the United States that exports most of its products experiences declining margins due to a rising US dollar.


A factory in an East Asian country is disrupted for weeks due to political protests that shutdown ports.


A legal dispute with a large supplier causes reputational damage, legal costs and potential legal penalties.


A mobile device gets poor reviews due to durability issues. Sales stall and inventory begins to build as retailers and customers return product.


A company is developing a robotic arm and has passed the design and prototyping phase. In procurement they discover that a component part will cost $1000 due to supply shortages. The business case is invalidated as it had assumed the part could be procured for $60.


A supplier fails to deliver critical ingredients shutting down production at a cookie factory for several days.


A telecom firm makes it difficult for customers to cancel their accounts with intentionally long waiting times for customer service. Industry regulators receive a large number of complaints and step in to investigate the firm.

Information Security

A security incident brings down the patient records and administrative systems at a hospital, jeopardizing patient care.

Reputational Damage

A company that is faking environmental compliance reports is exposed by a whistleblower.


A city's water infrastructure allows large amounts of waste water to flow into its water source when it rains hard. A local newspaper points out that a number of unhealthy chemicals are present in the city's tap water after each hard rain.


A partner that is critical to your supply chain suddenly and unexpectedly goes bankrupt and ceases operations.


A fire makes your head office location inaccessible for more than a month.


A firm takes out a large floating rate loan to buy back its own stock. The interest rate increases substantially over the next five years, causing ballooning interest expenses. At the same time, the stock price declines making the buy backs look ill advised.


An investor purchases a stock because it has a low PE. The investor is unaware that the company is in a cyclical industry that is in a state of rapid decline. The firm is highly leveraged and soon announces that it is in talks with creditors to restructure debt. The stock declines by a significant percentage.

Risk of Ruin

An investor leverages themselves by borrowing money and using it to buy leveraged investment instruments. A macro economic event sends stocks down resulting in complete loss of the investors capital.


A firm makes overly optimistic financial projections that fail to materialize. A large debt payment comes due that they can not cover. The missed payment triggers a damaged reputation and a variety of creditor actions that threaten the firm's ability to continue operations.


An investor purchases stock in a firm after a through investigation. The firm reports solid earnings but its price declines due to a market downturn that lasts several months. The stock price doesn't recover for three years.


A firm is deemed to be in violation of consumer protection laws due to its aggressive sales tactics.


A customer fails to pay what they owe you.

Concentration Risk

A bank lends a large sum to a handful of firms in a single industry. When the industry collapses, the bank faces a significant loss.

Counterparty Risk

An bank collapses and fails to meet its contractual obligations to its counterparties such as payments require by derivatives contracts.


A small business owner opens a high-end restaurant. A month later there is a recession and customers start going to cheaper spots.


A retiree purchases 10 year government bonds at a 2% yield and inflation jumps to 4%.


An hedge fund develops a model for algorithmic trading. The model works well under certain conditions. However, the model is flawed and suddenly incurs large losses when market conditions turn.


The largest bank in a country experiences a large scale information security incident resulting in a large number of unauthorized transactions. It's systems are down for days resulting in widespread financial instability and a market crash. Confidence in the country's financial system is threatened.


A tax ruling results in a significant punitive fine and back taxes for a firm.


An automotive firm spends significant sums to enter a new industry only to fail to establish competitive parity.


A large technology firm acquires an innovative startup in a rush to beat competitors to their technology. They over pay and rush due diligence only to find their technology is mostly smoke and mirrors.


A ski resort suffers when January is unseasonably warm resulting in rain and slush.


A fashion retailer achieves 50% of its sales in the run up to Christmas. They launch a fall-winter line that is out of touch with fashion trends in the season resulting in disappointing sales.

Business As Usual

An energy company is being acquired by a larger firm. Employees are worried about their future and executives are excited about compensation related to the acquisition. They fail to continue business as usual and products fall behind while inventories build. The acquisition is unexpected terminated and the firm is left in complete disarray.

Human Error

A poorly designed aircraft maintenance procedure fails to account for tools after each maintenance. A tool is left in an engine causing it to cease up just before takeoff.

Passive Risk

An energy company continues with a status-quo strategy despite obvious signs of change in their industry. Return on invested capital declines for a decade before investors aggressively demand a strategy change.


A real estate investment company has a $1 billion dollar debt with a ten year term. When the debt comes due, the market for credit has dried up and the firm is unable to refinance it. They are forced to quickly sell real estate at a loss to achieve basic liquidity.


A firm invests in a complete modernization of its core systems only to see the launch disrupt operations because the technology doesn't properly support the company's de facto business processes. The project is eventually recognized as an expensive failure.

Machine Biases

A bank implements artificial intelligence to approve or reject applications for credit products. The firm monitors a handful of metrics but no one at the company fully understands how the technology makes its decisions. Months later, customer complaints lead the company to discover that the artificial intelligence has rejected all applications from an entire state out of an apparent machine bias. A whistleblower publicizes the failure to the press.


A local taxi service experiences declining business when a city opens up new train lines.


A window company that hasn't changed their products in 30 years is suddenly faced with smart windows and products that offer passive heating and cooling benefits.

Unintended Consequences

A packaged food company adds a supplier to diversify its supply chain only to find later that supplied ingredients contain banned chemicals. The firm suffers severe reputational damage.

Secondary Risk

A homeowner buys flood insurance only to find that their insurance company goes out of business due to a large flood.

Cascading Failure

A high-speed rail system schedules high capacity trains minutes apart. Each train requires resources such as lines and platforms. When a single train has a mechanical problem it reverberates throughout the system causing widespread delays.

Force Majeure

A hurricane disrupts power to a city's essential services.


This is the complete list of articles we have written about risks.
AI Risk
Risk Avoidance
Brand Risk
Budget Risk
Business Risks
Change Risk
Compliance Risk
Concentration Risk
Cost Risk
Country Risk
Credit Risk
Demand Risk
Dread Risk
Economic Risk
Exchange Rates
Existential Risk
External Risk
Financial Risk
Force Majeure
Good Risk
Human Error
Risk Identification
Infinite Risk
Inflation Risk
Inherent Risk
Interest Rates
Internal Risks
Investing Risk
Legal Risk
Liquidity Risk
Model Risk
Moment Of Risk
Natural Disasters
Negative Risk
Operations Risk
Passive Risk
Personal Risk
Political Risk
Process Risk
Procurement Risk
Product Risk
Project Risk
Pure Risk
Quality Risk
Recession Risk
Risk Mitigation
Refinancing Risk
Regulatory Risk
Reputational Risk
Residual Risk
Resource Risk
Revenue Risk
Risk Appetite
Risk Aversion
Risk Examples
Risk Management
Risk Management Process
Risk Matrix
Risk Meaning
Risk Measurement
Risk Taking
Risk Tolerance
Risk Triggers
Risk vs Issue
Risk vs Opportunity
Risk vs Uncertainty
Risk-Reward Ratio
Seasonal Risk
Secondary Risk
Security Risk
Settlement Risk
Risk Sharing
Speculative Risk
Strategic Risk
Strategy Risk
Supply Risk
Systemic Risk
Tactical Risk
Taxation Risk
Technology Risk
Risk Transfer
Unforced Error
Upside Risk
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Business Risks

A list of common business risks.

Risk Treatment

The five things that can be done about risk.

Risk Management Effectiveness

A metric for measuring risk management.

Positive Risk

The potential that you'll achieve too much of a good thing.

Dread Risk

Any risk that people have a strong aversion too.

Risk Taking

The definition of risk taking with examples.

Risk Probability vs Risk Impact

The two main factors in modeling a risk.

Calculated Risk

A definition of calculated risk with an example.

Relative Risk

How to calculate relative risk with examples.

Risk Management

An overview of the risk management process.

Cascading Failure vs Resilience

An overview of cascading failure and resilience.

Business As Usual

An overview of business as usual.

Risk Mitigation

A list of techniques for reducing risk.

Risk Mitigation vs Risk Reduction

The difference between risk mitigation and risk reduction.

Risk Control

A list of common risk controls.

Risk Value

A definition of risk value with example calculation.

Risk Impact

The common types of risk impact.

Risk Communication

A definition of risk communication with examples.

Risk Management Process

Overview of the steps in a risk management process.
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