In September 2000, the CEO of Blockbuster was given the option to purchase Netflix for $50 million. At the time, Netflix was losing money and worried about bankruptcy. The Blockbuster CEO turned down the opportunity. This is an example of what type of risk?
A) Strategic risk
B) Compliance risk
C) Physical risk
D) Operational risk

Question

Quizplus · Accepted Answer

Strategic risk involves decisions made by a company's leadership that can potentially harm the company's future or cause it to miss out on opportunities. In this case, the Blockbuster CEO's decision not to purchase Netflix, which later grew to become a major competitor, is an example of a missed strategic opportunity, thus representing strategic risk.

In September 2000, the CEO of Blockbuster Was Given the Option