Types of Risk - Hopkin

Question 1

What are Hopkin’s 4 risk types?

Answer 1

1. Hazard (pure) Risks
2. Opportunity (speculative) risks
3. Control (uncertainty) risks
4. Compliance (mandatory) risks

Question 2

What are the features of Hazard risks?

Answer 2

• Operational and insurable
• Only negative outcomes
• Tolerances are typically set for these.

Question 3

What are the features of opportunity risks?

Answer 3

• Risks that are deliberately taken.
• Commercial/marketplace risks taken for a positive return.
• Risk vs. return
• Typically financial in nature

Question 4

What are the features of control (uncertainty) risks?

Answer 4

• Risks that gives rise to uncertainty of outcome.
• Unknown and unexpected events or event is known but impact is unknown.
• Difficult to quantify
• Management is about reducing the variance between anticipated outcomes and actual results.
• Examples: project management, implementation of tactics.

Question 5

What are the features of Compliance (Mandatory) risks?

Answer 5

• Risk of regulatory or legal penalties for failing to comply with rules.
• Compliance will minimise compliance risk.