Operational Risk

Operational Risk

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Operational risk is a type of financial risk that arises from the day-to-day operations of an organisation. It involves the potential for loss due to inadequate or failed internal processes, people and systems, or external events.

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This risk can include such issues as fraud, data breaches, reputational damage, and business disruption.

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As it is difficult to anticipate and plan for these risks, organisations must take steps to identify and mitigate them.

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This can involve developing policies and procedures for identifying risks before they occur, implementing controls to minimise their impact should they occur, and training staff on how best to respond in the event of an incident. By taking proactive steps to understand and manage operational risk, organisations can better protect themselves from unexpected losses.

Frequently Asked Questions

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.
Examples of operational risks include IT system failures, human error, fraud and natural disasters.
Companies can manage their operational risk by implementing effective controls and procedures to ensure that operations run smoothly, as well as instituting appropriate systems to monitor compliance with regulations.
The rewards associated with managing operational risk include increased efficiency, improved customer service, reduced costs and improved profitability.