Innovation

  What Is Operational Risk Management? Operational risk is the risk of loss resulting from ineffective or failed internal processes, people, systems, or external events that can disrupt the flow of business operations. The losses can be directly or indirectly financial. For example, a poorly trained employee may lose a sales opportunity, or indirectly a company’s reputation can suffer from poor customer service.  Operational risk can refer to both the risk in operating an organization and the processes management uses when implementing, training, and enforcing policies.  Operational risk  can be viewed as part of a chain reaction: overlooked issues and control failures — whether small or large — lead to greater risk materialization, which may result in an organizational failure that can harm a company’s bottom line and reputation. While operational risk management is considered a subset of  enterprise risk management , it excludes strategic, reputational, and fi...