What is Fundamental Risk
Fundamental risk is the risk that the business's fundamentals are degrading or about to degrade. If you see sales declining or the company is selling an outdated product, you need to stay away from this company. Increasing debt and an eroding cash position are other danger signs.
Over time, organizations have created a plethora of functions that manage business risks from their own point of view.
Researchers look at risk by product or market life cycle. For example, missing customer needs, mistakes in product design, poor messaging, insufficient trial or repeat purchases, product extensions, upgrades, and delays in discontinuing a product are all risks that product managers routinely face. Mathematically, a key formula is “expected value of perfect information.”
Product managers are constantly asking themselves, “What is the risk (probability) of missing an insight if we don’t invest more in research?”
