What is operational risk and how does it relate to compliance?

What is operational risk and how does it relate to compliance?

Operational risk refers to the potential for loss resulting from inadequate or failed internal processes, people, and systems. Compliance, on the other hand, involves adhering to laws, regulations, and internal policies. Together, they ensure that organizations operate effectively while minimizing risks.

Can you give me some examples of operational risks?

Sure! Examples of operational risks include system failures, fraud, human error, and supply chain disruptions. Each of these can impact an organization's ability to comply with regulations.

How can companies manage operational risk?

Companies can manage operational risk by implementing robust internal controls, conducting regular risk assessments, and providing employee training. Additionally, having a clear compliance framework helps mitigate these risks.

What role does technology play in managing these risks?

Technology plays a crucial role by automating processes, enhancing data analysis, and improving monitoring capabilities. It helps organizations identify and respond to risks more effectively.