The term operational risk is defined as a continuous cyclical process that includes decision making, risk analysis, risk control, and implementation of business risk policies, which in turn results in avoidance, acceptance, or mitigation of potential risk. It involves the assessment of risks to assets, people, processes and systems in the operations of an organization. It also covers the interaction of organizational policies and practices with risks within the company. Operational risk can affect several areas of an organization, including its financial results, its ability to maintain business and its profitability. An organization's ability to avoid the occurrence of unexpected events and/or loss of customers is affected by this risk. You can browse link to see the advantages of operation risk management to your business.
Operational risk is often related to information technology (IT) risks, which involves the risk of loss of information due to IT failure. Some risk management tools are designed to manage IT risk while others are designed to detect IT failures. Management of the information security process in an organization helps to mitigate the effect of information security incidents on information systems. It also helps to reduce the negative impact of security incidents on the operation of the organization. It may also minimize the cost of an IT incident. The goal of this risk management tool is to identify vulnerabilities in system functionality, identify and evaluate the impact of those vulnerabilities to the organization, identify sources of attack, and develop or implement the necessary strategies to mitigate or eliminate the vulnerabilities.
Operational risk can also affect the quality of service provided to customers. A business should consider the importance of identifying and controlling operational risks in order to achieve superior performance at all levels of the organization. In addition, the process of identification and assessment of operational risks requires the use of techniques and methods that provide more information about the nature of the risk and its relationship to the organization's objectives. When a risk is identified and controlled, the results can improve the organization's performance and productivity and increase the confidence of customers, employees, and other stakeholders in the organization.
The first step in the process of identifying and managing operational risk is the functional assessment of an organization's organizational resources. This involves evaluating the existing organization, identifying gaps in knowledge, processes and methods that affect the organization's ability to meet its goals, identifying the types of resources that may be required to meet these goals, identifying resources that are not currently being used, the relationships among these resources, identifying and evaluating the relationships among these resources, and their uses and the relationship between these resources with other organizational activities and objectives, and evaluating how the organization's objectives are affected by the resources. and how these resources affect the organizations effectiveness and the objectives of the organization. You can see here how operation risk management enhance organizations effectiveness.
Operational risk also includes the assessment of organizational processes that include resource allocation and resource planning. It may involve the evaluation of resource availability, such as human capital and financial resources. It may also include the identification of sources of change, such as technological change, regulatory changes, customer change, environmental change, political change, and demographic change. The analysis of organizational processes is used to help determine what changes should be made and to determine the impacts of these changes on the organization, including the impact of new and existing processes and the effects of any changes on organizational performance.
Operational risk is the process of evaluating the effects of the processes of an organization on the success of the processes of the organization and the performance of the organization's processes on the organization. The effectiveness of an organization is based on the ability of the organizations processes to meet the organizational objectives. This is achieved by determining the effect of the process changes on the organizational objectives, determining the effects of new processes on the effectiveness and productivity of the process, and determining the effect of the process changes on the organization's performance. on the organizations operational objectives. You can get more enlightened on this topic by reading here: https://en.wikipedia.org/wiki/Operational_risk_management.