Paper Contents
Abstract
Operational risk is the risk of loss stemming from inadequate or failed internal processes, people, systems, or from external events. It encompasses a wide range of potential threats, such as system failures, fraud, human errors, cyber-attacks, and natural disasters. These risks, unlike market or credit risk, are typically more challenging to predict due to their diverse and multifaceted nature.Operational risks manifest across all industries and sectors, and their impact can range from minor inefficiencies to significant financial losses, reputational damage, or even regulatory penalties. For example, a simple mistake in a bank's trading desk could lead to substantial financial losses, while a cyberattack on a healthcare system could compromise sensitive patient data.Effective management of operational risk not only safeguards the organization's assets and reputation but also ensures business continuity, compliance with regulations, and long-term profitability. In recent years, with advancements in technology and the increasing interconnectedness of business ecosystems, operational risks have evolved, making the need for robust frameworks more critical than ever.
Copyright
Copyright © 2024 Jay Sampat. This is an open access article distributed under the Creative Commons Attribution License.
