Operational Risk-How to manage operational risk?

Operational Risk: What do you need to know?

Operational risk is a risk of losses due to poor or failed actions, policies, systems or events that disrupt business operations. This is a type of business threat that each organization faces in its daily activities. Unlike other risks such as credit risk or market risk, operational risk is not directly related to the products or services that the company offers, but instead to how it operates and manages its internal and external environment.

Why is operational risk important?

Operational risk can have a significant impact on the company's performance, credibility and value. For example, operational risk may result in:

•Employee errors, such as misreporting data, miscalculating or violating regulations

•Criminal activity, such as fraud, theft, cybersex or money laundering

•Physical events, such as fires, floods, earthquakes or epidemics

•System failures, such as software bugs, hardware disorders or network shutdown

• Follow incompetence, such as delays, barriers or waste

•External incidents, such as legal disputes, regulatory changes or political instability

These events can lead to financial losses, legal obligations, consumer dissatisfaction, regulatory penalties or damage to credibility. In some cases, operational risk can also jeopardize the survival of a company.

How to manage operational risk?

Operational risk management is the process of identifying, evaluating, measuring, monitoring and controlling operational risk. These include:

•Establishment of a clear framework of governance and a culture of danger that defines character and responsibilities, policies and procedures, and risk hunger and tolerance

•risk Various tools and techniques, such as risk registers, self-assessment ، Identify and evaluate potential sources and operational risk reasons using audit or scenario analysis

•Measurement and quantification of operational risk effects and possibilities using metrics and indicators, such as key risk indicators (KRIs) ، Loss data or capital model

•d Monitoring and reporting events using operational risk performance and dashboards, score cards or reports

•terms Control and reduce operational risk using various strategies and initiatives such as prevention, detection, correction or transfer

Operational risk management is not a one-time activity but a permanent cycle that requires regular review and improvement.

How to learn more about operational risk?

Operational risk is a complex and dynamic topic that requires constant learning and updates. If you want to know more about operational risk, you can:

•Read books and articles on operational risk theory and practice

•Work industry standards and best practices on operational risk management

•Join professional associations and networks at operational risk

•Attend courses and seminars on operational risk topics

•Consult experts and practitioners on operational risk issues

Operational risk is an indispensable part of doing business. However, by understanding its nature and implications and applying effective operational risk management techniques ، you can reduce its negative effects and increase your business performance.