Operational Risk
A leading firm in risk management
We resolve problems that were not addressed in time, and actions that cause economic losses for a company or its processes, whether caused by human error, poorly supervised processes, IT failures or misuse, or lack of training.
As part of our value proposition, we provide support and training to properly manage each of the root causes of risk:
Human factors
Failures that can arise from poor practices, human error or negligence; for example, when staff are not fully trained or when a demotivating work environment breeds bad habits.
Unsupervised processes
A cycle of activities that is not carried out properly or monitored to detect failures will inevitably cause problems. This includes unclear workflows, vague objectives, and work policies and quality standards that lack focus.
Intelligent system failures
Just as with human negligence, intelligent systems can lead to errors if they are not properly programmed, operated or implemented.
External factors
If risk can arise within the activities a company controls, even more risk can come from events outside it: natural disasters, failures by outside service providers, legal circumstances and more.
To evaluate how to respond to potential operational risks, the following factors should be considered:
Frequency
The underlying likelihood that an operational risk will occur, given the company's activities. It can be estimated from the percentage of risk-causing incidents recorded in its processes.
Severity
An understanding of the damage an operational risk would cause the company, since it directly affects its equity. This is where listing and applying preventive countermeasures comes in.
Operational risks are usually managed and measured by a company's Internal Control, Audit or Risk departments using three methodologies:
Basic indicator
The company averages its gross annual income over the last three years to estimate the volume of operationsat risk.
Standardized
The volume of operations is broken down and calculated for each of the company's business lines.
Advanced measurement
This calculation estimates the likelihood of operational risks more precisely, resulting in a fairer contingency budget projection.
Contact our professionals for an operational diagnosis and start building an operating strategy with controlled risk.