What type of risk does the Excel Widget Company face due to increased competition?

The type of risk that the Excel Widget Company faces due to increased competition is indeed business risk. Business risk refers to the potential for losses due to factors that affect the overall performance of a company in its market environment. Increased competition can lead to various challenges, such as reduced market share, lower profit margins, and the need for constant innovation to maintain relevance.

When competition intensifies, a company's ability to sustain its revenue and profit can be jeopardized if it cannot effectively respond to competitors' strategies or changes in consumer preferences. This is particularly significant in industries where product differentiation is minimal, and companies must compete aggressively on price, quality, and service.

In contrast, credit risk pertains to the possibility of loss arising from a borrower's failure to repay a loan or meet contractual obligations, and operational risk relates to losses due to failed processes, systems, or external events. Market risk is associated with fluctuations in the financial markets that can impact the value of investments. While these risks can also affect a company, in the context of increased competition, business risk is the most relevant concern.