Operational risk is the potential for losses due to faulty or failed processes, policies, systems, or events that disrupt business operations. Employee errors, criminal activities, such as fraud, and physical events are some of the factors that can trigger operational risk. Organizations must manage these risks in order to remain compliant with legal obligations and avoid costly losses. Measuring operational risk can be difficult, as organizations must integrate diverse types of data to understand their risk profile.
Banks must follow the guidelines of the Basel Committee on Banking Supervision (BCBS) to allocate capital to cover losses caused by operational risk. If not addressed, the occurrence of operational risks can result in monetary losses, competitive disadvantages, problems related to employees or customers, and business failure. Organizations must continuously monitor and evaluate risks in real time to minimize their potential impact. When assessing operational risk, emphasis should be placed on practical corrective measures to eliminate exposures and ensure successful responses. To transform the management of non-financial risks, organizations should establish a comprehensive transformation program. We offer tactical and transformative solutions for the entire company to manage these risks.
We address issues as broad as establishing the three lines of defense or compliance organizations, and as specific as testing the stress of customers' operational risk models to ensure compliance.
