Operational Risk Management
The types of risks that businesses usually face are various, and are divided into different categories depending on either area of risk or the level of control. There are at least thirteen different types of risks ("Risk Categories | Project Management Guide", 2017) that fall into three categories: internal, strategic and external risks ("Categorizing Risks for More Effective Risk Management", 2017). Internal risks occur when something wrong can happen within the company, including results of poor management or broken systems. Strategic risks are those risks that company acknowledges when making a strategic decision, investment, new development that would, hopefully, increase revenue. External risks are beyond control of the business and include natural disasters, new trends and competition, electricity cuts and etc.
There are more specific types of risk within the categories above. One of the most important ones is budget risk. Ideally, budget planning needs to be precise and cover all the unexpected expenses. However, many companies have to take a risk and release products or services when they are most needed, hoping to increase sales. Waiting for the full budget safety means losing potential customers, therefore the issue remains a two-edged sword. In case of failure, business has to either delay salaries, or taxes, or even go bankrupt. Another important risk is operational risk: something might go wrong on either side, both external an internal. Business can suffer losses if one of the links of the logistics chain is lost, for example, a delivery truck gets in a car accident. On external side, there might be some technical issues, for example, if the lights go off during a busy day in the office that relies on electricity too much. Another risk to mention is information security risk: the risk of confidential business information getting into the wrong hands, jeopardizing the business and giving competitors an unfair advantage. There is also a technological risk, very up-to-date at the moment: many companies working in the Internet have to keep up with demanding rapid changes of technology, such as introduction of HTML5 and new design standards. Companies which refuse to evolve their technology are much more likely to lose customers to those who are on the verge of technological advancements. Lastly, it is important to discuss the quality risk, which is dependent on the qualifications and expertise of staff. Companies have to both keep the most effective members of the team and at the same time keep looking for new high-quality personnel.
TASK 1- AC. 1.2
The manager of Operational Risk Manager (OPM) has several responsibilities to ensure smooth business processes and risk avoidance ("Roles and Responsibilities | Risk Management", 2017). First, the management needs to have an already developed system of risk identification. The risk manager is responsible for evolving and developing the system further, adapting it to market changes. OPM also needs to establish a number of potential responses to every possible risk, evaluate their efficiency and help the top management make decisions case-by-case. OPM …
