Studies of the large public companies indicate that strategic risk contributes for more than half of the reasons attributable to decline in market capitalization of these companies. In view of this statement, explain the

Meaning of Strategic Risks Strategic risk is the risk that failed business decisions may pose to a company. Strategic risk is often a major factor in determining a company's worth, particularly observable if the company experiences a sharp decline in a short period of time. Strategic risks are events, whether internal or external, that impacts an organisation's ability to reach their objectives and goals. As is the case with risk, it refers to probability. In this case, it's the probability that an organisation's strategy will fall short of goals. These risks can have severe consequences that impact organizations in the long term. Strategic risk is a category of risk in the same way that risks such as operational risk, financial risk, reputational risk and regulatory risk are. As Edinburgh Business School professors Roberts, Wallace, and McClure defined the concept, strategic risk is corporate-level risk that "affects the development and implementation of an organisation's strategy." Examples of Strategic Risks Since businesses are dynamic, strategic risk may look different at various points in time, as factors outside of the company's control can get in the way of achieving goals. For example, in case of a bank with major market share, then competitive risk may not currently be at the top of the management's mind. But, if a new entrant comes into the space and starts to threaten the market share, then competitive risk becomes a focal point. Other Examples of events or circumstances that could derail an organization's strategic goals include: Strategic decisions that are unclear or poorly made Changes in senior management and leadership The introduction of new products or services Mergers and acquisitions which prove unsuccessful Market or industry changes, such as a shift in the needs or expectations of customers Problems with suppliers and other stakeholders Financial challenges Failure to adapt to a changing environment or keep up with competitors Company reputation damage