SU6 - Micro Factors - Operational Risk Management

Question 1

Explain Operation Risk.

Answer 1

It is the exposure of an enterprise to losses resulting from people, processes, systems and external events.

Question 2

What are the benefits of Operational Risk Management?

Answer 2

1. Improving the ability to achieve its business objectives.
2. Let management focus on revenue generating activities.
3. Minimise day-to-day losses
4. Provide a more robust enterprise risk management.
5. help to establish a system which enables the correlation of different classes of risk.

Question 3

Provide 3 examples of operational risk.

Answer 3

1. Adopting the wrong business strategy
2. Failing to execute a well-thought-out strategy.
3. not modifying a successful strategy over time