A threat or opportunity that is by nature not quantifiable or cannot be quantified using typical risk management tools and analysis. It mainly includes leadership risk and behavior risk. Causes of soft risk are shortsightedness as to product life cycle (cradle to grave product type), managerial incompetence, ivory tower mind-set and arrogance on the part of management, balance sheet fraud, moral hazard, inability to integrate management, mismanagement of crisis and reputation risks, mismanagement of value conflict, poor public relations, ineffective corporate governance, and so on.
The soft risk is part of the total risk of a business entity.
This type of risk is also known as intangible risk.
