Which of the following risks is associated with a high focus on service quality?

A high focus on service quality can indeed lead to overspending to deliver unnecessary high service levels. Organizations striving for exceptional quality may allocate excessive resources towards enhancing service features or capabilities that do not necessarily align with customer needs or expectations. This can result in investing in technologies, processes, or personnel that exceed what is required for maintaining satisfactory service delivery.

In this context, the emphasis on service quality can inadvertently create inefficiencies in the budget. Resources that could be utilized more effectively to improve the overall business strategy may instead be diverted to over-engineered service solutions. As a result, while the intention is to enhance customer satisfaction and loyalty, it might lead to diminished financial performance if spending does not correlate with actual customer demands.

Other options touch on potential risks as well, but they do not directly connect to the nature of prioritizing service quality. Underdelivering on promises might be more associated with prioritizing quantity over quality, while the loss of business contacts and financial inefficiency might stem from mismanagement or lack of strategic alignment rather than a direct consequence of focusing excessively on service quality.