Risks have to be firstly classified into different category for us to understand and measure, only then can it be controlled. Most times, risks are classified into the following broad categories:
- Business Risk: these are the risks arising from being into the business
- Operational Risk: typically arising out of human intervention – manual touch points – could be due to lack of training, frauds, lack of adequate control points, simply due to absenteeism, etc..
- Financial Risk: Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default.
- Compliance Risk: these arise due to non-compliance to regulations.