Have you experienced a system failure recently? Or hired an inexperienced candidate due to a budget constraint? Has your branch suffered a natural disaster? If your answer is yes to even one of these questions, you have encountered operational risk.

Operational risk is one of the key risks a business organisation faces. In simple words it is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events. Operational risk is inevitable in our business and it not only damages the company’s reputation but also tarnishes your image if you or your department is involved.

7 main operational risks identified by BASEL II

		Internal fraud: Tax non-compliance, misappropriation of assets, forgery, bribes, deliberate mismarking of positions and theft carried out by the staff
		External fraud: Theft, cheque fraud and breaching the system security like hacking or acquiring unauthorized information by third parties like customers, suppliers and vendors
		Non-compliance to employment practices and workplace safety rules: Discrimination, unethical termination criteria, non-compliance with health and safety regulations
		Negligent practices affecting clients, products and business: Privacy and fiduciary breaches, misuse of confidential information, suitability issues, market manipulation, money laundering, unlicenced activities and product defects
		Damage to physical assets: Damages caused to physical assets due to natural disasters or other events like terrorism or vandalism
		Business disruption and system failures: Hardware and software failures, failure to implement IT project, disruption in telecommunications and power failure
		Failure in execution, delivery and process management: Errors in data entry, miscommunication, deadline misses, accounting errors, inaccurate reports, incorrect client records, negligent loss of client assets and vendor disputes

As part of a risk management programme we are making an exhaustive list of the operational risks that threaten our organisation and need your help. Mail us a list of the operational risks associated with the activities of your department at opc@sharekhan.com by January 31, 2019. After all, knowing the kinds of operational risk we face is the first step towards managing it.

Who are we? Watch this space, you will know soon.