Obsolescence Risk

The risk that a process, product or technology used or produced by a company for profit will become obsolete, and is no longer competitive in the marketplace. Obsolescence risk is most significant for technology-based companies or companies with offerings that are based on technological advantages. This can also extend to the risk that certain costs laid out for obsolete products or services cannot be recouped. These risks can significantly alter a company's growth prospects and earning potential.

The stock market "graveyards" are littered with dead companies whose products or technology was rendered obsolete. For example, these were the technology companies listed on Morgan Stanley's "recommended list" in 1982:

-Control Data
-Digital Equipment
-NCR
-Storage Technology

Due to obsolescence, none of these companies exists today! Obsolescence risk is a factor for all companies to some degree, and is a necessary side-effect of having a thriving and innovative economy.


Investment dictionary. . 2012.

Look at other dictionaries:

  • obsolescence — ob‧so‧les‧cence [ˌɒbsəˈlesns ǁ ˌɑːb ] noun [uncountable] when a product, system etc is becoming no longer useful because something better is available, possible etc: • Now markets are subject to the faster obsolescence of products due to greater …   Financial and business terms

  • risk — The *probability of the occurrence of an event with negative consequences. The IIA defines risk as the probability that an event or action, or inaction, may adversely affect the organization or activity under review (quoted in Hermanson and… …   Auditor's dictionary

  • risk acceptance — An informed decision to accept the *risks (and *rewards) of an activity or *market. For example, the risks of operating in high technology markets can be extremely high, owing to the danger of rapid *product Obsolescence, but markets of this type …   Auditor's dictionary

  • Planned obsolescence — The Centennial Light in the Livermore, California Firehouse is often cited as evidence for the existence of planned obsolescence in later produced light bulbs.[1] Planned obsolescence or built in obsolescence[2] …   Wikipedia

  • Continuous obsolescence — or perpetual revolution is a phenomenon where industry trends, or other items that do not immediately correspond to technical needs, mandate a continual readaptation of a system; such work does not increase the usefulness of the system, but is… …   Wikipedia

  • Digital Repository Audit Method Based on Risk Assessment — The Digital Repository Audit Method Based on Risk Assessment (DRAMBORA) is a methodology and associated software based toolkit developed by Digital Curation Centre (DCC) and DigitalPreservationEurope (DPE) to support the assessment of digital… …   Wikipedia

  • Average Age Of Inventory — The average number of days it takes for a firm to sell a product it is currently holding as inventory to consumers. The formula to calculate the average age of inventory is C/G x 365, where C is the average cost of inventory at its present level… …   Investment dictionary

  • Build to order — Made to Order redirects here. For the television program, see Made to Order (television series). Build to order (BTO) and sometimes referred to as make to order (MTO), is a production approach where once a confirmed order for products is received …   Wikipedia

  • obsolescent — obsolescence ob‧so‧les‧cence [ˌɒbsəˈlesns ǁ ˌɑːb ] noun [uncountable] when a product, system etc is becoming no longer useful because something better is available, possible etc: • Now markets are subject to the faster obsolescence of products… …   Financial and business terms

  • Pre-dreadnought battleship — is the general term for all of the types of sea going battleships built between the mid 1890s and 1905. Pre dreadnoughts replaced the ironclad warships of the 1870s and 1880s. Built from steel, and protected by hardened steel armour, pre… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.