What is an impact of risk that can affect an organization?

The impact of risk that can affect an organization is financial because financial risks directly influence an organization's profitability, cash flow, and overall financial health. These risks could arise from various sources, including changes in market conditions, fluctuations in currency exchange rates, or unexpected costs. When financial risks materialize, they can lead to significant monetary losses, affect operational budgets, and impact long-term strategic decisions.

Understanding the financial implications of risks enables organizations to implement effective risk management strategies, such as financial hedging, cost containment measures, or diversifying revenue streams. By monitoring financial risks closely, an organization can better prepare for adverse events, ensuring stability and sustainability in an unpredictable business environment. This financial focus is critical for maintaining investor confidence and supporting growth initiatives.