Question

Explain the factors on which the operational risk management depends

Answer 1

Answer:

Operational risk is defined (after Basel II) as the risk of monetary losses as a result of faults and / or errors in process, technology or skills or due to external factors. Operational risk may also include other risks such as fraud, legal, physical, and environmental risks.”

Answer 2

The various factors on which operational risk management depends are divided into internal and external factors. The internal factors are to do with having no proper systems and procedures and the external factors are based on changes in government policies and technology

Explanation:

• There are internal and external factors on which operational risk management is dependent upon. The internal factors are more to do with not being properly organised,  the roles and responsibilities not being properly defined, not having systematic procedures and systems and more
• The external factors on which operational risk management depends  are changes in governmental decisions and policies, changes in technology, changes in banking procedures, economic environment and more. It could result in a major monetary loss for the company.
• The operational factors are also dependent upon the organisational structure, getting proper support and communication from the management of the enterprise, employee training and more. There could be other risks involved in regards to some form of disaster, fraud, theft, environment risks and more.

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