What Does Strategic Risk Involve

question 11

Multiple Choice

What does strategic risk involve?

• A) The risk that a new product won't be developed within the desired time and budget.
• B) The risk of not matching the role or purpose of a new product with a specific strategic need or issue of the organization.
• C) The risk that a new product won't meet a market need in a value-added, differentiated way.
• D) The risk of environmental influences such as natural disasters that inhibit the functioning of the firm.

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Definitions:

Endowment Effect

A psychological phenomenon in which people assign higher value to things merely because they own them.

Loss Aversion

In prospect theory, the property of most people’s preferences that the pain generated by losses feels substantially more intense than the pleasure generated by gains.

Anchoring Effect

A cognitive bias where an individual relies too heavily on an initial piece of information (the "anchor") when making decisions.