Operational Risk and the Management of Operational Risks (Operations & Operational Risk Management)
Summary
TLDRThis video offers an in-depth look at operational risk, its types, and the importance of managing it. It covers the definition, impacts, and the comprehensive process of operational risk management, including risk identification, assessment, mitigation, and monitoring. The video also highlights the benefits of effective risk management and a seven-step approach to mitigate risks, emphasizing the necessity of a robust strategy to protect a business's reputation and financial stability.
Takeaways
- 📈 Operational risk refers to the potential for business operations to fail due to internal inefficiencies, human error, or external events.
- 🏦 The Basel Committee on Banking Supervision defines operational risk as the risk of loss from inadequate or failed internal processes, people, systems, or external events.
- 🌐 Operational risk encompasses business continuity, crisis management, process systems, and IT risks, among others.
- 🔍 A sophisticated approach to operational risk management can enhance a business's ability to thrive and grow.
- 🚨 Operational risk can include legal, human capital, physical assets, and bottom-line business risks, but typically excludes strategic and reputational risks.
- 🛠️ Operational risk management is a continuous process involving risk assessment, control implementation, and monitoring.
- 👥 Every individual in an organization plays a role in operational risk management, contributing to a strong safety culture.
- 💡 Integrated Risk Management (IRM) uses technology to predict significant risks and connect different risk mitigation areas.
- 📊 The benefits of operational risk management include improved business reliability, risk management effectiveness, and decision-making.
- 🔑 The operational risk management process consists of risk identification, assessment, mitigation, and monitoring and reporting.
Q & A
What is operational risk?
-Operational risk is the possibility of business operations failing due to inefficiencies or breakdowns in a firm's internal processes, people, and systems, human error, and external events such as regulatory changes.
What are the common sources of operational risk?
-Common sources of operational risk include internal process failures or gaps, human error, system failures, and external risks imposed by customers, suppliers, natural disasters, regulatory changes, or geopolitical shifts.
How does operational risk relate to a company's strategic objectives?
-Operational risk impacts the firm's strategic objectives by potentially causing damage to the business, including loss, regulatory overhead, and reputational damage. Effective management of operational risk helps protect these objectives.
What are the types of operational risk mentioned in the script?
-The types of operational risk include fraud, other criminal activity, workplace policies and safety, products and business practice, physical assets, business disruption, and process management.
What are the impacts of operational risk if not managed properly?
-If operational risks materialize and are not managed properly, they may cause significant damage to a business, including outright loss, increased regulatory overhead, and reputational damage.
What is the role of corporate leaders in operational risk management?
-Corporate leaders should make safety part of their value structure by initiating and driving a safety culture throughout the organization.
What is integrated risk management (IRM)?
-Integrated risk management is a concept where software and technology work together to help organizations predict where their most significant risks might be while connecting different risk mitigation areas through cloud technology.
What are the benefits of operational risk management?
-Benefits of operational risk management include improved reliability of business operations, strengthened decision-making processes regarding risk management, reduction in losses caused by poorly identified risks, early identification of unlawful activities, lower compliance costs, and reduced potential damage from future risks.
What are the key steps in the operational risk management process?
-The key steps in the operational risk management process are risk identification, risk assessment, risk measurement, risk mitigation, and monitoring and reporting.
How can a company reduce its operational risk?
-A company can reduce its operational risk by developing a sound operational risk management strategy, which includes understanding the nature of the business and associated risks, implementing relevant controls, and continuously assessing and managing those risks.
What is the seven-step approach to mitigate operational risk?
-The seven-step approach to mitigate operational risk includes task segregation, curtailing complexities in business processes, reinforcing organizational ethics, putting the right people in the right jobs, regular monitoring and evaluation, periodic risk assessment, and learning from past risk incidents.
Outlines
🔍 Introduction to Operational Risk Management
This paragraph introduces the concept of operational risk, which is the potential for business operations to fail due to internal inefficiencies or breakdowns, human error, or external events. It emphasizes the importance of managing operational risks and outlines the structure of the video, which includes discussing the meaning, types, impacts, and management of operational risks. The Basel Committee on Banking Supervision's definition of operational risk is provided, highlighting the need for comprehensive business risk assessment. The paragraph concludes by stressing that no business is immune to operational risk and that a sophisticated approach to risk management is crucial for business growth.
📈 Understanding and Impacts of Operational Risk
This section delves into the types of operational risk and their potential impacts on a business. It categorizes operational risks into fraud, criminal activities, workplace policies and safety, product and business practices, physical assets, maintenance, business disruption, and process management. The impacts of operational risk are also discussed, ranging from financial loss and regulatory overhead to reputational damage. The paragraph underscores the importance of not underestimating operational risks and the benefits of developing a robust operational risk management strategy.
🛠️ Operational Risk Management Strategy
The paragraph outlines the operational risk management process, which includes understanding the nature of the business and its risks, and adopting different levels of risk management. It introduces the concept of Integrated Risk Management (IRM), which uses technology to predict and mitigate risks. The paragraph also discusses the roles of various stakeholders in an organization in managing operational risks and the benefits of effective operational risk management, such as improved reliability, decision-making, and reduced losses and compliance costs.
📋 Operational Risk Management Principles and Process
This section explains the four essential principles of operational risk management and outlines the five stages of the risk management process: identification, assessment, measurement, mitigation, and monitoring and reporting. It emphasizes the importance of making risk decisions at the appropriate level, integrating risk management into planning, and the continuous nature of the process. The paragraph provides a detailed look at each stage, from identifying risks to implementing controls and monitoring their effectiveness.
🔄 Implementing Risk Control and Monitoring
The paragraph discusses the implementation of risk control measures once mitigation strategies have been decided upon. It highlights the importance of documenting control rationale, objectives, and activities. The paragraph also emphasizes the need for regular monitoring and review of controls to ensure their effectiveness. It stresses the role of workers and managers at all levels in maintaining controls and the importance of an ongoing approach to risk assessment.
🔄 Seven-Step Approach to Mitigate Operational Risk
This section introduces a seven-step approach to mitigate operational risk, which includes task segregation, reducing business process complexities, reinforcing organizational ethics, assigning the right people to the right jobs, regular monitoring and evaluation, periodic risk assessment, and learning from past incidents. The paragraph explains how each step contributes to a robust operational risk management framework and the importance of adopting a proactive approach to risk management.
🏁 Conclusion on Operational Risk Management
The final paragraph concludes the discussion on operational risk and its management. It reiterates the significance of operational risk and the potential for significant damage to a business if not managed effectively. The paragraph summarizes the importance of a continual process of assessing risks and implementing controls, and encourages viewers to engage with the content by commenting, liking, and sharing the video. It also prompts new viewers to subscribe to the channel for updates on new video uploads.
Mindmap
Keywords
💡Operational Risk
💡Risk Management
💡Internal Processes
💡Human Error
💡External Events
💡Business Continuity Plans
💡Regulatory Changes
💡Strategic Objectives
💡Integrated Risk Management (IRM)
💡Risk Mitigation
💡Workflow Automation
Highlights
Operational risk is the risk of business operations failing due to inefficiencies or breakdowns in internal processes, people, and systems.
Operational risk includes human error and external events such as regulatory changes.
Operational risk management is essential for business continuity plans, environmental risk, crisis management, and IT risks.
Operational risk can impact a firm's strategic objectives and bottom line.
Operational risk management is a continual process of assessing risks and implementing controls.
There are various types of operational risks, including fraud, criminal activity, workplace policies, and safety.
Operational risks can cause significant damage to a business, including loss, regulatory overhead, and reputational damage.
Operational risk management involves a comprehensive business risk assessment.
The process of operational risk management includes product suitability, market demand, and people risks.
Operational risk management has evolved to include integrated risk management (IRM) using software and technology.
Corporate leaders must create a culture that makes operational risk management a crucial part of their corporate value proposition.
Effective operational risk management can prevent unexpected operational loss and reduce compliance costs.
Operational risk management is beneficial for improving the reliability of business operations and decision-making.
There are three levels of operational risk management: in-depth, deliberate, and time-critical.
The four principles of operational risk management are: do not accept unnecessary risk, make risk decisions at the appropriate level, accept risk when benefits outweigh the costs, and integrate operational risk management into planning.
The operational risk management process includes risk identification, assessment, measurement, mitigation, and monitoring and reporting.
Risk mitigation strategies include risk transfer, avoidance, acceptance, and control.
Keys to reducing a firm's operational risk include task segregation, reducing complexity, reinforcing organizational ethics, and regular monitoring.
The seven-step approach to mitigate operational risk management includes task segregation, curtailing complexities, reinforcing ethics, assigning the right people, regular monitoring, periodic risk assessment, and learning from past incidents.
Operational risk management is crucial for the reputation and financial stability of a business.
Transcripts
operational risk and the management of
operational risks
welcome to the risk management of
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this video discusses operational risk
and the management of operational risks
in this video you will understand the
meaning of operational risk types of
operational risk impacts of operational
risk operational risk management the
benefits of operational risk management
how operational risk management works
operational risk management principles
operational risk management process keys
to reducing a firm's operational risk
and the seven-step approach to mitigate
operational risk management
now let us start
what is operational risk
operational risk is the possibility of
business operations failing due to
inefficiencies or breakdowns in a firm's
internal processes people and systems
human error and external events such as
regulatory changes are common sources of
such risk the basel committee on banking
supervision has described the
operational risk as the risk of loss
resulting from inadequate or failed
internal processes people systems or
external events as such operational risk
captures business continuity plans
environmental risk crisis management
process systems and operations risk
people-related risks and health and
safety and information technology risks
all these risks need to be managed and
the more sophisticated the approach to
risk management the more chance the
business must thrive and grow
no business is immune to operational
risk
at any time in any business task or
process the risk may arise from internal
process failures or gaps human error
system failures or external risks
imposed by customers suppliers natural
disasters regulatory changes or
geopolitical shifts operational risk may
include legal risks risks to human
capital and physical business assets or
risks to the bottom line of the business
typically strategic and reputational
risks are not included in the definition
of operational risk but they may be
adversely impacted when operational
risks remain unchecked for too long
operational risk relates to the
production process
this includes the process itself the
asset base the people within any project
team and the legal controls within which
the organization operates
operational risk can be defined as the
risk of direct or indirect loss
resulting from inadequate or failed
internal processes people and systems or
external events
operational risk also effectively
includes anything that can impact the
organization's overall performance and
ability to create value operational risk
therefore includes events such as
mistakes or missed opportune at ease
the primary element of operational risk
management is that the organization's
control monitoring and assurance
activities should be based on a
comprehensive business risk assessment
that identifies and ranks risks by their
significance to the company in
determining significance the risks must
be evaluated in the likelihood and
impact on the organization it is this
latter aspect of the impact that needs
to be well defined
traditional measures have focused on a
financial value or the potential for
injury although these aspects must be
considered the primary consideration is
how the risk impacts the firm's
strategic objectives the process of
operational risk management includes the
product itself its suitability for
market demand marketing and sales and
delivery people risks include risks
associated with human resources and
staff development
legal risks include contractual issues
together with statutory obligations and
liability
types of operational risk
operational risk is associated with how
businesses function internally and
broadly cover the following categories
1.
fraud for example bribery misuse of
assets and tax evasion
2. other criminal activity for example
data theft and hacking 3. workplace
policies and safety for example
discrimination staff health and safety
4. products and business practice for
example product defects and market
manipulation
5. physical assets for example vandalism
natural disasters and equipment
maintenance
6. business disruption for example
utility down times and it system
failures and
7. process management for example
accounting errors data entry errors and
non-reporting
these risks present varying threat
levels to business from a minor
inconvenience to potentially putting its
very existence in jeopardy the company
should not underestimate the potential
impacts of operational risk
impacts of operational risk
if operational risks materialize they
may cause significant damage to a
business including
outright loss for example costs of
dealing with system failure and
processing error
regulatory overhead for example costs of
audits and mandated investigations and
reputational damage for example arising
from fraudulent activity and unfair
practices
contrary to other types of business
risks operational risks are not
typically revenue driven or willingly
incurred some organizations accept them
as an unavoidable cost of doing business
however an organization can reduce its
risk exposure and operating costs by
developing a sound operational risk
management strategy for its business
operational risk management
operational risk management is a way to
get a holistic view of a company's risk
footprint throughout the supply chain
and everyone across the organization has
a role to play in making an
organization's safety culture the best
it can be operational risk management is
a methodology for organizations looking
to put real oversight a nd strategy into
place when it comes to managing risks
every business face circumstances and
changes in their situation that can be
perceived as presenting varying levels
of risk to that business from minor
inconveniences to potentially putting
its existence in jeopardy operational
risk management is a continual process
of assessing risks and implementing
relevant controls that lead to either
acceptance mitigation or avoidance of
risk it is however necessary to
understand the nature of a business and
associated risks to ensure sound
operational risk management this
understanding will help the organization
identify assess monitor and adequately
control or mitigate the risks
to achieve organizational operational
risk goals companies must work together
to mitigate risk and that includes a
need for
1. corporate leaders make safety part of
their value structure by initiating and
driving a safety culture throughout the
organization
2. engineers to apply inherently safe
design principles
3 maintenance engineers to verify
isolations while reliability engineers
maintain asset up time
4. operators to start up shut down and
respond to abnormal conditions
5. procurers suppliers and transporters
to understand their contribution to
delivering and managing quality spare
parts materials and services that
prevent the loss of containment
operational risk management has evolved
to become much more technologically
advanced which has led to the concept of
integrated risk management irm
integrated risk management is where
software and technology work together to
help organizations predict where their
most significant risks might be while
connecting different risk mitigation
areas through cloud technology
integrated risk management can also
offer companies prescriptive advice to
determine the leading indicators to help
them mitigate incidents before they
occur
corporate leaders must create a culture
that makes operational risk management
mitigation strategy a crucial part of
their corporate value proposition doing
so will help firms to keep their people
safe their products sustainable and
their operations productive
effective operational risk management
can also help a business organization to
1. prevent unexpected operational loss
to
cut compliance or auditing costs
3. detect unlawful activities and
4. minimize exposure to future risks
benefits of operational risk management
operational risk management is
beneficial to business organizations
operational risk management is an
essential step for every company that is
looking to avoid potentially damaging
issues benefits of operational risk
management include
1.
improvement of the reliability of
business operations
2.
improvement of the effectiveness of the
risk management operations
3. strengthening of the decision-making
process regarding the management of
risks
4. reduction in losses caused by poorly
identified re sks
5. early identification of unlawful
activities
6. lower compliance costs
7. reduction in potential damage from
future risk show operational risk
management works
the first stage of any operational risk
management strategy is understanding the
nature of a business and its risks
manage a company that runs water ski
lessons the business will be susceptible
to risks different from that of a
company that creates technology for
vending machines
worrying about risks that are not
related to a business amount to a waste
of time
there are three levels of operational
risk management that an organization can
adopt
1.
in depth as the name suggests this is
the kind of risk management that we
would all be undertaking in an ideal
world as it will deliver the best
results and practically makes risk a
thing of the past not wholly because not
every risk is foreseeable
2. deliberate this is still not a panic
station in the world of risk management
but is undertaken at various stages
during the life cycle of a project or a
business and can come in the form of
routine safety checks or performance
reviews
3.
time critical this kind of operational
risk management often requires urgent
attention during operational change it
is usually done when there is a limited
time to act before the potential
consequences of unknown risks start
manifesting
operational risk management principles
four essential principles govern all
actions associated with operational risk
management the four principles of
operational risk management apply to all
tasks and operations at all levels of
responsibility within organizations
1. do not accept unnecessary risk
unnecessary risk has no commensurate
return regarding benefits or
opportunities everything involves and
implies risks the most logical choice
for accomplishing an operation should
meet the minimum acceptable requirements
the corollary to this axiom is accept
necessary risk which is required to
complete the operation or task
successfully
2. make risk decisions at the
appropriate level anyone can make a risk
decision however the appropriate
decision maker is the person who can
allocate the resources to reduce or
eliminate the risk and implement
controls the decision maker must be
authorized to accept levels of risk
typical of the planned operation
including equipment's wear and tear and
loss of operational effectiveness he
should elevate decisions to the next
level in the management chain by
ensuring that the available control will
not reduce residual risk to an
acceptable level
3. accept risk when benefits outweigh
the costs cost implications of all
identified benefits should be assessed
before accepting operational risks for
instance high risk endeavors may be
undertaken when the benefits exceed the
total costs
balancing costs and benefits is a
subjective process and ultimately the
balance may have to be arbitrarily
determined by the appropriate decision
maker
for integrate operational risk
management into planning at all levels
risks can be easily assessed and managed
at the planning stages of an operation
subsequent changes can be made during
the planning and implementation of
operations this is because both planning
and operational risk management are
continuous processes
operational risk management process
there are five stages of operational
risk management risk identification risk
assessment measurement and mitigation
and monitoring and reporting
step 1 risk identification
operational risks must be identified to
ensure effective management and control
risk identification starts by
understanding the organization's
objectives risks represent anything that
prevents the organization from attaining
its objectives the identification
process should involve staff from all
levels of the business to ensure that
various backgrounds and experiences
generate a cohesive result
step 2 risk assessment
risk assessment is a systematic process
for rating risks of likelihood and
impact the outcome from the risk
assessment is a prioritized listing of
known risks the risk assessment process
may be like the risk assessment done by
an internal audit the assessment step
entails applying quantitative and
qualitative measures to determine the
level of risk associated with specific
hazards the risk assessment process
defines the probability and severity of
an accident resulting from the hazards
based upon the exposure of humans or
assets to the hazards step 3 risk
mitigation
the risk mitigation step involves
choosing a path for controlling the
specific risks the company should
investigate specific strategies and
tools that reduce mitigate or eliminate
the risk all risks have three components
the probability of occurrence the
severity of the hazard and people and
equipment's exposure to the risk
effective control measures reduce or
eliminate at least one of these
the analysis must consider the overall
costs and benefits of remedial actions
providing choices if possible in the
operational risk management process
there are four options for risk
mitigation risk transfer risk avoidance
risk acceptance and risk control
1.
risk transfer
risk transfer entails shifting the risk
to another organization the two most
common means for transferring are
outsourcing and insurance outsourcing is
a business practice in which a company
hires a third party to perform tasks
handle operations or provide services
it is worthwhile to emphasize that
management cannot wholly transfer the
responsibility for controlling risk when
outsourcing insurance entails ensuring
against the risk ultimately transferring
some of the risks financial impacts to
an insurance company a good example of
transferring risk occurs with
cloud-based software companies when a
company purchases cloud-based software
the contract usually includes a clause
for data breach insurance the purchaser
is ensuring the vendor can pay for
damages in the event of a data breach
the vendor should also have data center
to provide system and organization
control soc reports thereby reducing the
likelihood of a data breach
2. risk avoidance
avoidance prevents the organization from
entering accepting a risk
risk avoidance eliminates hazards
activities and exposures that can
negatively affect an organization's
assets for example when choosing a
vendor for a service the organization
could accept a vendor with a higher
priced bid if the lower cost vendor does
not have adequate references while risk
management aims to control the damages
and financial consequences of
threatening events risk avoidance seeks
to avoid compromising events entirely
while the complete elimination of all
risk is rarely possible a risk avoidance
strategy is designed to deflect as many
threats as possible to avoid the costly
and disruptive consequences of a
damaging event a risk avoidance
methodology attempts to minimize
vulnerabilities that can pose a threat
risk avoidance and mitigation can be
achieved through policy and procedure
training and education and technology
implementations
3.
risk acceptance
risk acceptance is a concept where an
individual or business identifies risk
and renders it acceptable thereby making
no effort to reduce or mitigate it the
potential loss from the identified and
accepted risk is considered bearable by
comparing the risk to the cost of
control management could accept the risk
and move forward with the risky choice
risk acceptance is a reasonable option
for small and infrequent risks because
they are not catastrophic or expensive
hence there is no critical need to
manage them the impacts of such
uncertainties are usually bearable and
accepted as part of the operations and
treated as they occur
4. risk control
controls are processes of an
organization to reduce the impact of a
risk to increase the likelihood of
meeting the corporate objectives
for example installing software behind a
firewall reduces the likelihood of
hackers gaining access while backing up
the network reduces the impact of a
compromised network
step 4 implement risk control
once the risk mitigation choice
decisions are made the next step is
implementation management must formulate
a plan for applying the selected
controls by ensuring the availability of
resources including materials and
personnel to facilitate a robust
operational risk management framework
the control rationale objective and
activity should be well documented to
communicate and execute the controls the
controls implemented should focus on
preventive control activities over
policies
step 5 monitoring and review
once controls are in place the process
must be monitored and reviewed regularly
to ensure their effectiveness control
monitoring involves testing the control
for appropriateness of design
implementation and operating
effectiveness any exceptions or issues
should be reported to the management to
established necessary action plans
workers and managers at every level must
fulfill their respective roles to ensure
that the controls are well maintained
the operational risk management process
continues throughout the life cycle of
the organization keys to reducing a
firm's operational risk
the proposed mitigation strategy for
most risks usually includes creating new
business processes or adjustments to
existing processes some businesses
promulgate new policies and procedures
by email in the immediate aftermath of
an incident that impacts operational
risk in the crush of their daily tasks
even the most willing and motivated
employees often forget the new rules
businesses that have already embraced
workflow automation can easily create
new workflows alter approval
requirements and create monitoring
dashboards so that compliance with
operational risk management procedures
is ensured the system enforces
compliance with the new risk mitigation
procedures
when defining new workflows to deal with
specific operational risks there are a
few guiding principles to keep in mind
1.
identify and divide tasks
list the necessary steps for eliminating
a particular risk if a single individual
or role is currently performing them
divide the tasks so that one role
performs the tasks and another role
checks or approves the result of the
task
2. assign tasks to the right people it
is good to assign tasks to the right
employees to achieve a firm's objectives
the company must not be so aggressive in
trying to level workloads and tasks
assigned to employees who are not
trained or unwilling to accept
additional responsibilities
3. streamline and automate business
processes
operational risk can be reduced by
automating business processes the
company should replace internalized
judgment with data-driven business rules
to eliminate significant sources of
human error
4. brainstorm the exceptions
many risk events stem from the
unforeseen exception situation not
examined during the initial business
process design
rush orders sudden staff departures
receipt of substandard raw materials
missed steps during the business peak
season or product recalls are some of
the accepted situations that may
introduce operational risk if no formal
processes are in place
5. measure performance and exceptions
data is crucial because it provides
businesses with the means of validating
their initial risk assessment is the
frequency and impact severity in line
with what the company initially
anticipated is the current mitigation
strategy working or does the company
needs to tweak it are some individuals
or departments better than others at
reducing this risk or should the company
change its initial decisions if the
company is served with a lawsuit or face
government review because of a
particular risk a firm's historical data
is often crucial to minimizing fees
judgments and fines
6. adopt an ongoing approach
risk assessment is only meaningful in
the context of the current business
situation last year's risks and
mitigation strategies may now work in
today's world the company should review
its risk assessment regularly quarterly
semi-annually or annually if the company
needs to tighten or loosen some of its
corporate rules or change its workflows
this can be accomplished quickly with
the workflow automation tool
the seven-step approach to mitigate
operational risk management
operational risks impact the reputation
and financial stability of a business
significantly lack of robust risk
mitigation strategy will result in
various operational failures leading to
crises in organizational management that
is why many businesses invest in
designing a robust risk management
framework essentially operational risks
are best discovered controlled and
mitigated using a seven-step approach it
supports multiple facets and can
alleviate numerous risks concurrently
here is the seven-step approach to
mitigate operational risk management
one
task segregation effective segregation
of tasks and duties reduces internal
theft and risks related to fraud this
prevents an individual from taking
advantage of the numerous aspects of
transactions and business processes or
practices
2. curtailing complexities in business
processes reducing complexity in
different business processes mitigates
operational risks
organizations can achieve this by
curtailing manual activities and the
number of people and exceptions during
business processes
3. reinforcing organizational ethics
creating strong organizational ethics is
essential to mitigate operational risk
and ensure a robust operational risks
management framework organizational
ethics can be reinforced by combining
the workforce's values and principles
with the organization's ideology
4. the right people for the right job
having the right people in the right
jobs can reduce business process
execution and skill and technology
usage issues having the right people in
the right jobs will also result in
appropriate workforce utilization
adherence to timelines enhanced quality
fewer errors and process breakdowns
5. regular monitoring and evaluation
business processes are more effective
with well-designed performance
indicators in place key performance
indicators kpis are critical for timely
detection and mitigation of risks
hence the need for continuous monitoring
and review to identify discrepancies and
be proactive in managing them
6. periodic risk assessment periodic
assessments of all operational risks
ensure a robust operational risk
management framework it is imperative to
be risk ready by ensuring regulatory
compliance i.t assets skills
competencies processes and objective
business decisions
7. look back and learn risk incidents
and remedial activities employed in the
past will help build effective
strategies to counter future risks
previous risk occurrences will help an
organization to implement a more robust
proactive operational risk management
framework it also supports real-time
amendments that suit the current
operating scenario
conclusion
operational risk and management risk
management have been discussed in this
video operational risk is the
possibility of business operations
failing due to inefficiencies or
breakdown in internal processes people
and systems human error and external
events such as regulatory changes are
familiar sources of such operational
risk
if operational risks materialize they
can cause significant damage to a
business operational risks can also
impact the reputation and financial
stability of a business significantly
hence it is essential to manage the
operational risk exposure of a business
effectively operational risk management
is a continual process of assessing
risks and implementing relevant controls
that lead to either acceptance
mitigation or avoidance of risk
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