Important Issues in Managing Operational Risk

In much the same light as the management of market risk and credit risk is crucial to preserve a small business. Many banks and companies see operational risk and its management just as a result of the needs of regulators. To increase the profit of your business you can hire the project risk assessment software and online risk assessment.

 Important Issues in Managing Operational Risk

Obviously, this perception is wholly wrong.

In this report, we're going to analyze the 8 important issues that one has to bear in mind while managing operational risk. Let us start with a definition of operational risk.

"Operational risk is the risk of loss caused by inadequate internal processes, people, and systems or from external events".

Let's look a bit more closely at the elements of the definition. What do we understand by a few of its elements?

"Individuals" – People are workers; our employees. Employees can make errors. These could be intentional or accidental. People also often don't follow the correct procedures that may lead to losses.

"Processes" — All company activities comprise of processes. These might be complex sequences of events such as one finds in a factory engaged in the production or a simpler sequence of tasks involved in taking an order and dispatching the goods to a buyer. All activities involve processes.

"Systems" — Many processes require the use of external apparatus. These may be computer systems or machines or tools. Getting back to our waking up"process" something similar to our toothbrush could be regarded as such a method.

"Topical events"– Our procedures happen in the broader world. This environment is continually under threat of disturbance. Disruptions may be bad weather, natural disasters, pandemics, political chaos, social unrest and so forth.  

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