Risk Management: How to Prevent Operational Risks for Your Business?
Posted: Tue Dec 17, 2024 5:04 am
Operational risk is the potential for business operations to fail due to inefficiencies or disruptions in your internal processes, people, and systems. Human error and external events (such as changes in regulations, which is especially relevant in Russia) are common sources of this risk.
Types of operational risk
Operational risk is based on how you perform tasks in your europe cell phone number list business. Risk is typically associated with the internal functioning of your business and generally covers the following categories:
fraud - such as bribery, misappropriation of assets and tax evasion;
other criminal activities - data theft, hacking, etc.;
workplace policies and safety - this includes discrimination, health and safety of employees;
products and business practices - product defects or market manipulation;
physical assets - vandalism, natural disasters, poor or irregular equipment maintenance, etc.;
business disruptions - utility downtime, IT system failures;
process management - accounting errors, data entry errors, lack of reporting, etc.
These risks represent varying levels of threat to a business, from minor inconveniences to immediate threats to its very existence. The potential impact of operational risk should not be underestimated.
Impact of operational risk
If operational risks materialize, they can cause significant damage to your business, including:
direct losses - for example, the cost of correcting a system failure or processing error;
Regulatory overhead costs - costs of audits or mandatory investigations;
reputational damage - damage resulting from fraudulent or dishonest actions.
Unlike other types of business risks, operational risks are generally not related to revenue generation or voluntary decisions. Some organizations perceive them as an inevitable cost of doing business.
Types of operational risk
Operational risk is based on how you perform tasks in your europe cell phone number list business. Risk is typically associated with the internal functioning of your business and generally covers the following categories:
fraud - such as bribery, misappropriation of assets and tax evasion;
other criminal activities - data theft, hacking, etc.;
workplace policies and safety - this includes discrimination, health and safety of employees;
products and business practices - product defects or market manipulation;
physical assets - vandalism, natural disasters, poor or irregular equipment maintenance, etc.;
business disruptions - utility downtime, IT system failures;
process management - accounting errors, data entry errors, lack of reporting, etc.
These risks represent varying levels of threat to a business, from minor inconveniences to immediate threats to its very existence. The potential impact of operational risk should not be underestimated.
Impact of operational risk
If operational risks materialize, they can cause significant damage to your business, including:
direct losses - for example, the cost of correcting a system failure or processing error;
Regulatory overhead costs - costs of audits or mandatory investigations;
reputational damage - damage resulting from fraudulent or dishonest actions.
Unlike other types of business risks, operational risks are generally not related to revenue generation or voluntary decisions. Some organizations perceive them as an inevitable cost of doing business.