What is Operational Risk?
Operational Risk The risk of loss resulting from inadequate or failed internal processes, people, systems, or from external events, including legal and compliance risk, but excluding strategic and reputational risk.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Operational Risk” Used in Practice?
Operational risk events such as system failures or internal fraud can result in significant losses for insurance companies if not properly managed.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Operational Risk?
The risk of loss resulting from inadequate or failed internal processes, people, systems, or from external events, including legal and compliance risk, but excluding strategic and reputational risk.
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