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Operational Risk

Even across diverse industries, operational risk managers face similar challenges, so the requirements of an effective operational risk management framework share common elements.

An effective and ongoing system to manage operational risk requires three major components:

  • Measurement: you need sophisticated analytical tools to quantify operational risk exposures in order to make informed decisions, to include operational risk in risk-based performance figures, to understand your sensitivity to key risk indicators (KRIs) and to have a reference point against which to measure business progress
  • Identification: you need the ability to proactively identify scenarios likely to result in operational failures, which will allow timely management intervention
  • Stress-testing: you need the power to perform what-if analyses so vital to engineering internal processes that minimize the effects of operational failures