Operational Risk

The risk of loss due to errors by people or flaws in processes. Operational risk also includes instances of fraud.


You assume your spouse will be making the payments on a monthly utility bill.

Downside Scenario:

Your spouse assumes you are making the payment, and you suffer a late payment fee.

Upside Scenario:

Your assumption is correct. The bill is paid, and you are able to fit in a round of golf on a beautiful day.

The infamous Enron debacle was an operational risk realization on a massive scale. Fraud initiated at the highest level of the firm cost employees billions of dollars in salaries as well as pension and health benefits.

Related terms:

People Risk

The risk of loss or damage due to people’s acts of commission or omission.

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