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Consulting Case Interview Practice Questions

Category - Strategy

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Jerry was in the midst of assessing his risk for a project at a well-known real estate firm when the stock market collapsed, sending shockwaves throughout his company and his project. The market crashing can be classified as what type of risk:
  1. Foreseeable
  2. Internal
  3. Technical
  4. External
  5. Redoubtable
Explanation
Answer: d - Factors affecting the stock market would be considered external risk factors to this and most other companies.

Internal risk factors allude to those factors relating directly the project within the company such as staffing, resources, etc. Technical risk factors refer to those relating to technology. Since the stock market crashing was not foreseeable, this wouldn’t be a possible answer.

Key Takeaway: Firms cannot possibly prepare for all unforeseen risks. However, external risk must always be considered when considering whether to proceed with a venture.
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