Why Operational Risk Management Is Important: How to Protect Your Business

No business is immune to risk. Every day, businesses face a variety of risks that can impact their bottom line. From natural disasters to cyberattacks, there are many potential threats that businesses need to be prepared for. One of the most important ways to protect your business is through operational risk management. In this blog post, we will discuss why operational risk management is so important and how you can protect your business from potential threats.

Why operation risk management is important?

Operational risk management is an important part of any business. It helps minimize the potential loss caused by operational failures and improve overall performance. Operational risk refers to the probability that a company’s operations will fail due to unforeseen events such as natural disasters, human error, or fraud. According to Aon Corporation’s Global Risk Management Survey (GRMS), operational risk is the second-largest source of financial loss for companies around the world.

Types of risk

The risks and uncertainties in business can be divided into two main categories: external (outlook) risks and internal (process) risks. External or outlook risks are those that are outside of your control, such as the economy, political instability, and natural disasters. Internal or process risks are those that are within your control, such as poor decision-making, inadequate controls, and employee theft.

Operational risk management is important because it helps you identify, assess, and manage both internal and external risks. By identifying and assessing the risks facing your business, you can put in place effective controls that will help reduce the likelihood of them occurring.

Operational risk management also helps you to identify and evaluate potential threats, determine their impact on your business and decide how best to respond. It is important not only for reducing risks but also for improving overall performance by ensuring that operations are running smoothly.

How do you manage operational risk?

There are a number of steps you can take to help manage operational risk in your business. These include:

  • Identifying and assessing the risks facing your business
  • Putting in place effective controls to reduce the likelihood of them occurring
  • Determining how best to respond to potential threats
  • Monitoring and reviewing operations regularly to ensure they are running smoothly
  • Training employees on how to identify and respond to risks


Protecting your business from operational risks should be a top priority for any organization. By taking the necessary steps to mitigate these risks, you can help ensure the safety of your employees, customers, and brand reputation. What are some steps you’ve taken in your own company to manage operational risk? We’d love to hear from you in the comments below.

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