Risk Type is a classification label that is used to identify and characterise the variety of risk phenomena to which an individual or organization is exposed. A Risk Taxonomy is constructed out of a collection of risk types organized along some particular classification scheme.
Given the wide scope of possible risks there are many different dimensions that can be used to classify risks, indicatively:
- Discrete risk events such as those covered by insurance, versus "continuous" risks, for example exposure to fluctuating prices and Market Risk
- Whether there is a legal, contractual basis to the risk (Contractual Risks)
- The underlying risk factors that create the risk (physical forces, economic behavior etc.)
- The type of impact / loss generated (physical, emotional, reputational, monetary etc.)