Business Model Risk

This is the risk that the firm or organization is impacted or suffers loss due to a fundamental flaw or inherent weakness in the high level or strategic premise or business structure of the organization, that renders its way of undertaking its business offering, products and services, business practices and/or relationships uneconomic, unviable or uncompetitive. Changes to an industry structure can give rise to Business Model Risk.

For a new business or venture, it is the risk that the business model is not sustainable or robust and, for the same reasons outlined above, may be uneconomic, unviable or uncompetitive in its current form.

Other risk categories than may give risk to Business Model Risk are Product Obsolescence Risk, Government & Regulatory Risk, Climate Change Risk and the longer term impacts of Commodity / Input Price Risk.