Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events. It is a type of risk that arises from the day-to-day operations of an organization and can lead to financial loss, legal liability, or damage to reputation.
Operational risk can arise from a variety of sources, including:
Managing operational risk is an important part of any organization's risk management strategy. Effective management of operational risk involves:
Effective operational risk management is important for several reasons:
Operational risk is a type of risk that arises from the day-to-day operations of an organization and can lead to financial loss, legal liability, or damage to reputation. Effective management of operational risk is essential for ensuring the financial stability of an organization, complying with laws and regulations, protecting an organization's reputation, and gaining a competitive advantage.