From a risk governance perspective, what are the two main types of risks?

The choice of financial and non-financial risk as the two main types of risks in risk governance is appropriate because it captures the broad spectrum of potential challenges that organizations face. Financial risks involve market-related exposures that can impact an organization's financial performance, such as credit risk, liquidity risk, and market risk. These risks are quantifiable and often subject to measurement and statistical modeling.

Non-financial risks encompass a wider array of factors that do not directly affect financial metrics but can significantly influence an organization's reputation, operational efficiency, and strategic objectives. This category includes risks such as operational risk, compliance risk, reputational risk, and environmental risk, which are less tangible and often require more qualitative approaches to manage.

Both types of risks interact with each other, where non-financial risks can lead to financial consequences and vice versa. A comprehensive risk governance framework should consider both types to ensure that an organization is resilient and can strategically manage potential disruptions.