Operational Risk

A form of risk that summarizes the risks a company or firm undertakes when it attempts to operate within a given field or industry. Operational risk is the risk that is not inherent in financial, systematic or market-wide risk. It is the risk remaining after determining financing and systematic risk, and includes risks resulting from breakdowns in internal procedures, people and systems.

Operational risk can be summarized as human risk; it is the risk of business operations failing due to human error. Operational risk will change from industry to industry, and is an important consideration to make when looking at potential investment decisions. Industries with lower human interaction are likely to have lower operational risk.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Operational risk — Categories of financial risk Credit risk Concentration risk Market risk Interest rate risk Currency risk Equity risk Commodity risk Liquidity risk Refinancing risk …   Wikipedia

  • operational risk — The risk to the bank that errors made in the course of conducting its business will result in losses. The Federal Reserve calls this operational risk and states in its definition that operational risk arises from the potential that inadequate… …   Financial and business terms

  • operational risk — The risk of direct or indirect loss resulting from inadequate or failed internal processes and systems, or from a wide variety of external events. The control of operational risk has been the object of much attention in recent years, for example… …   Accounting dictionary

  • operational risk — The risk of direct or indirect loss resulting from inadequate or failed internal processes and systems, or from a wide variety of external events. The control of operational risk has been the object of much attention in recent years, for example… …   Big dictionary of business and management

  • operational risk — operacinė rizika statusas Aprobuotas sritis draudimas apibrėžtis Nuostolių rizika dėl darbuotojų, sistemų, netinkamų ar nepavykusių vidaus procesų arba išorės įvykių poveikio. atitikmenys: angl. operational risk šaltinis Lietuvos Respublikos… …   Lithuanian dictionary (lietuvių žodynas)

  • operational risk — operacinė rizika statusas Aprobuotas sritis kredito ir finansų įstaigos apibrėžtis Tikimybė patirti nuostolių dėl žmonių, sistemų, netinkamų ar nepavykusių vidaus procesų arba dėl išorės įvykių poveikio, įskaitant teisinę riziką. atitikmenys:… …   Lithuanian dictionary (lietuvių žodynas)

  • Operational risk management — See also: Risk management The term Operational Risk Management (ORM) is defined as a continual cyclic process which includes risk assessment, risk decision making, and implementation of risk controls, which results in acceptance, mitigation, or… …   Wikipedia

  • Standardized approach (operational risk) — In the context of operational risk, the standardized approach or standardised approach is a set of operational risk measurement techniques proposed under Basel II capital adequacy rules for banking institutions.Basel II requires all banking… …   Wikipedia

  • Risk — takers redirects here. For the Canadian television program, see Risk Takers. For other uses, see Risk (disambiguation). Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable… …   Wikipedia

  • Risk adjusted return on capital — (RAROC) is a risk based profitability measurement framework for analysing risk adjusted financial performance and providing a consistent view of profitability across businesses. The concept was developed by Bankers Trust in the late 1970s. Note,… …   Wikipedia

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