Operations
What Is Operational Risk?
Operational risk summarizes the uncertainties and hazards a company faces when it attempts to do its day-to-day business activities within a given field or industry. A type of business risk, it can result from breakdowns in internal procedures, people and systems—as opposed to problems incurred from external forces, such as political or economic events, or inherent to the entire market or market segment, known as systematic risk.
Operational risk can also be classified as a variety of unsystematic risk, which is unique to a specific company or industry.
Operational risk falls into the category of business risk; other types of business risk include strategic risk (not operating according to a model or plan) and compliance risk (not operating in accordance with laws and industry regulations).
Risk Analysis
Risk analysis is the process of identifying and analyzing potential issues that could negatively impact key business initiatives or projects. This process is done in order to help organizations avoid or mitigate those risks.
Operational risk focuses on how things are accomplished within an organization and not necessarily what is produced or inherent within an industry. These risks are often associated with active decisions relating to how the organization functions and what it prioritizes. While the risks are not guaranteed to result in failure, lower production, or higher overall costs, they are seen as higher or lower depending on various internal management decisions.
Because it reflects man-made procedures and thinking processes, operational risk can be summarized as a human risk; it is the risk of business operations failing due to human error. It changes from industry to industry and is an important consideration to make when looking at potential investment decisions. Industries with lower human interaction are likely to have lower operational risk.
Data Measurement
We all produce data for one reason or another and need to get the best value out of this and other data.
Regular measure can be used for forward strategic planning, marketing, financial, staff performance or straight out confidence in what we do.
One of the things we see regularly in businesses is the lack of useful key performance Indicators (KPI’s), particularly in the technical/compliance areas. SMS consultants will work with you to examine the core issues and develop your KPI’s and measure progress towards your individual company goals.
We ensure that all results, good and bad, of the measures are presented as data indicators in the best way that will serve your business.
Get in touch with SMS Consulting today to see how we can help your business
Contact
Email: sue@smsconsult.co.nz
Phone: 027 437 3605
Napier 4110
Business Hours
9.00am – 5.00pm
Monday – Friday
(or by appointment)