Operational Risk Essay

907 words - 4 pages

Operational Risk
Key Term
Operational Risk is the monetary risk that a corporation faces when people, processes, or system failures occur. The concept of operational risk is a constant in the workplace and has a major impact on decision making within the corporation. In my current workplace, we are considering a major change in workflow, and must measure the operational risk to the benefits of the proposed changes.
Explanation of the Key Term
Many factors must be considered when a change is proposed within an organization. Benefits and detriments must both be weighed in order to make the most informed decision; however, even after careful consideration, some decisions are poor. ...view middle of the document...

One important process that can lessen the impact of risk, is the use of internal audits. Audits can decipher problems and provide improvement plans, before the impact of the risk factor becomes too large. Integrating business process management with operational risk management will increase an organization’s chances of achieving optimal business performance (Enescu & Enescu, 2010, p. 314). Above all other factors, the leadership within the management team can have the largest impact on operational risk by setting the example for the corporation and keeping the mission of the corporation in the forefront.
All successful organizations must address the concerns that operational risk management discovers. In all the articles researched for this discussion, this concept was consistently in the forefront of every corporation’s management practices. Many corporations develop a strategy for the proper analysis and calculation of risk to maximize the organization’s rate of success (Radomska, 2014, p. 33). Other organizations use simulators in an effort to predict capital accuracy, precision, and robustness (Opdyke, 2014, p. 49). As in the originally researched article, these articles addressed the need for a consistent, measurable method by which to assess risks that threaten an organization.
Another common thread seen among the articles was the understanding that assessing risks is an extremely complex and challenging concept. It is a challenge to account for all the dependencies that could have an impact on the operational risk calculation (Mittnik et al., 2014, p. 84). Most successful companies facilitate these processes by using sophisticated mathematical calculations in their risk assessment. Utilizing these techniques may aid in risk assessment; however, it is still quite challenging, if not impossible, to develop a comprehensive list of all possible threats.
Operational risk assessment must be an ongoing,...

Other Papers Like Operational Risk

Credit Risk Analysis in Standard Charter Bank

562 words - 3 pages Best Practice in Risk Management in Banks A Two-day Practical Workshop The Workshop Objective: Bank managers will understand how risks are identified, quantified in terms of their impact on earnings, monitored and managed within banks. Program participants will become better equipped to: • • • Identify and quantify the bank’s vulnerability to credit, market, liquidity, operational, regulatory and reputational risks. Understand and learn best

Operations Essay

305 words - 2 pages line, or potentially their bonuses. On the other hand the audit committee may be more concerned with managing their own risk and request a greater focus on risk management and control activities. Audit committees are primarily interested in assurance services regarding risk and control. Operational management is primarily concerned with consultative help regarding the efficiency of operations and adequacy of control mechanisms. Senior

Project Management

613 words - 3 pages register. It is more prevalent in projects that involve consortia. Only very few persons are conversant with the risk in the entire project. 7- Limitation- Qualitative consequences are measured in descriptive ways, they are not quantifiable in the risk register or graded according to severity. The risk factors within qualitative premise are expressed descriptively. An example is when an operational document is not seen and may affect audit

Gm Hedging

635 words - 3 pages impact (consider monetary liabilities and balance sheet effect also). This is because not only operational cash flow items but balance sheet items such as monetary liability are also subject to exchange risk. If you consider GM’s Canadian, the operational cash flows are 1,682 (Exhibit 9). Exhibit 10 also reveals an insight on the balance sheet effects and the monetary liabilities which are subject to exchange rate risk. Exhibit 11 shows the ARS


5577 words - 23 pages focus on credit risk. 2. In 1996, Basel I was modified to include Market Risks. 3. In 2004, Basel II guidelines was introduced with a. New Capital Adequacy framework b. Capital requirement for operational risk management c. Guidelines for supervisory review process and market discipline 4. In 2009, Basel II framework was modified with following changes d. Changes to capital requirements for complex and

Manage and Lead People and Activities Within the Office Environment

1209 words - 5 pages as their staff. Strategic decisions change the direction of the business. They are high risk not been done before and is not likely to be repeated. 3.1.2 Operational Operational decisions are short term decisions which relate to the day to day running of the business. They are routine decisions and may be taken by the office manager. They are highly structured low risk decisions and failure would have a minor impact on Classic Interiors

Organisational Behaviour

4334 words - 18 pages wrestle with what were the processes and the critical components for real-time operational decisionmaking, as well as the relationships among decisionmaking, CRM and SA. The first component was the "rising risk continuum" (Lofaro and Smith, 1993), as embedded in event sets for LOFT. Later, the concepts/components of "critical mission impact areas" and the "critical mission factors" (Lofaro and Smith, 1998) that composed these areas were added. In

It Risk Management

1301 words - 6 pages not be treated primarily as a technical function carried out by the information technology professionals who control and administer the information technology system, but as a necessary management function of the company (Stonebrner). Risk management is the method that allows information technology supervisors to assess the operational and economic expenses of protective measures and achieve gains in operational capability by keeping the

Risk Management Process

1206 words - 5 pages example a perpetual inefficiency in the production process accumulates over a certain period of time and translates into operational risk.There are several bodies that lay down the principles and guidelines for the process of risk management. The steps involved remain the same more or less. There are small variations involved in the cycle in different kinds of risk.The risks involved, for example, in project management are different in comparison to

Insurance Cycle Management in a Competitive Environment

1195 words - 5 pages Corporate Functions Excluding Group Reinsurance Germany © Zurich Financial Services - UBS Conference on P&C Insurance and Reinsurance in Europe, June 26, 2007 6 Active diversification: balanced global General Insurance portfolio benefits from diversification A balanced risk landscape… 17% 6% 1% 22% 5% 5% Market/ALM risk Business risk Operational risk Premium & reserving risk Re-ins credit risk Natural cat risk Investment

Enterprise Wide Risk Management

3548 words - 15 pages environment, and even enterprise risk management does not create such an environment. Rather, enterprise risk management enables management to operate more effectively in environments filled with risks. According to KPMG 2001 report “enterprise risk management provides enhanced capability to: · Align risk appetite and strategy · Link growth, risk and return · Enhance risk response and decisions · Minimize operational surprises and losses · Identify

Related Essays

Operational Risk Essay

1659 words - 7 pages Operational Risk measurement This is defined as “the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This includes legal risk, but excludes strategic and reputation risk”.9 Such risks are likely to be significant in Islamic Banks due to specific contractual features and the general legal environment. Specific aspects that could raise operational risks in Islamic

Qantas Operational Risk Essay

690 words - 3 pages Assume that the operating rental commitment for 2009 due between 1-5 years is distributed equally over the years 2011-2014, i.e. 2700m/4= $675m. The commitment due beyond year 5 in total is $1186m. The number of years beyond year 5 is calculated by dividing the total amount of commitments due beyond year 5 (> 2014) by the amount of commitments due in year 5, i.e.1186/675=1.757=2 years. This means the total discount period equals 5 years + 2

Risk Management In Banking Essay

9309 words - 38 pages first time, a measure for operational risk, while the market risk measure remains unchanged. 2.2.2 THE SECOND PILLAR - SUPERVISORY REVIEW PROCESS Supervisory review process has been introduced to ensure not only that bank have adequate capital to support all the risks, but also to encourage them to develop and use better risk management techniques in monitoring and managing their risks. The process has four key principles- a) Banks should

Controllers Essay

655 words - 3 pages limited to: -Controllers Technology Office/ Financial Systems & Analysis - New Productsd - Tax - Corporate Treasury - Liquidity Risk Management -Funding - Capital Management - Credit - Credit Risk Management and Advisory - Market Risk Management & Analysis - Firmwide Strategy - Bank Strategy and Business Development As an Operational Risk team member, you will: Participate in a business relationship