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Operational Risk - what it is.....

Operational risk, for those who are still unsure, is a crucial aspect of business management and not just a checklist exercise for adhering to the rules.

To understand more about operational risk and its importance in accomplishing organisational goals, keep reading!🔖

Operational risk refers to the potential loss arising from inadequate or failed internal processes, people, systems, or external events. It encompasses a wide range of risks that can hinder an organization's performance and disrupt its goals.

🎯 Why is operational risk important to the achievement of organizational objectives? 📈

1️⃣ Protection: A company's assets, reputation, and brand value are protected by identifying and minimising operational risks, assuring business continuity.

2️⃣ Efficiency: By identifying process bottlenecks, optimising workflow, and minimising inefficiencies, effective risk management increases operational efficiency.

3️⃣ Compliance: Managing operational risks ensures compliance with regulatory requirements, industry standards, and legal obligations, minimizing penalties and reputational damage.

4️⃣ Decision-making: Making informed decisions is made possible by having a thorough understanding of operational risks. This helps to optimise plans, allocate resources more efficiently, and pinpoint problem areas.

5️⃣ Resilience: Proactively addressing operational risks builds resilience, allowing organizations to adapt swiftly to changing environments, mitigate disruptions, and maintain stability.

📌 Remember, effective operational risk management is crucial for sustained success and achievement of organizational objectives but should not be performed in isolation of other risk categories. Let's embrace a proactive approach to identify, assess, and mitigate operational risks! 🚀

Leaving you with this - I wonder if operational risk is synonymous to enterprise risk thinking🤔

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