Operational risk is a subjective or statistically assessment to a likely fails in a process.

The Failure is estimated by probability & intensity, whether if executed by internal or external event .

 

Common types of operational risk (examples in parentheses) :

• Security risks and information technologies ( computers infrastructure collapse, hacking , introducing a virus ) .

• Financial reporting risks ( incorrect representation of the financial report that has not been mapping and monitoring professional counselor SOX ) .

• Compliance risks ( non- compliance with regulatory bodies such as the Ministry of Finance, Israel Securities Authority , the Bank of Israel)

• HR risks (embezzlement of work, bribery of a senior manager)

• Project risks ( underpricing project due to time constraints, budget, resources, and identifying needs Deficiency)

 

 

The operating risk estimation is based mainly on a questionnaire quality scale that the becoming values ​​obtained weighted score of damage probability & intensity. When the damage assessment is done before and after controls.

 

Operational risk management as a financial risk management needs professional evaluation of an expert in order to minimize the exposure of a company or private person before entering activities / new product.

 

Common examples :

• Project risk reduction can be done when using computing tools for project management , including detailed design, management constraints and safety factors.

• Reduction of risk embezzlement or theft of information must be made in a preliminary stage of the recruitment process of hiring of new employees.

• Reduction of financial reporting risks is done by mapping properly the work processes relating to risk financial issues including implementing effective and automated controls that expect to decrease the damage and the probability of their occurrence .

• Preliminary step to reduce IT risk is doing a detailed risk survey with professional guidance and Ongoing information technology security expert that automate the control and managing the IT Unit in the company.