To illustrate how operational risk manifests itself, it is necessary to understand the relationship between the drivers of a specific risk event and the impact (i.e. outcome) of the risk event. Some examples are given in the following table [Root cause gives rise to a risk event resulting in an impact or multiple outcomes, some of which are quantifiable.].
|
Driver |
Risk event |
Impact types (outcomes) |
|
|---|---|---|---|
|
People |
Arson - a deliberate act committed by a person |
Fire - the event |
• Death/injury • Financial loss/cost • Property damage • Customer disruption |
|
Process |
Manual error |
Inaccurate accounts |
• Financial loss • Reworking accounts |
|
Systems |
IT software fault |
ATMs shut down/unavailable |
• Customer complaints • Compensation • Reputational damage • Regulatory censure |
|
External |
Very severe ice storm |
Buildings inaccessible/invocation of contingency arrangements |
• Customer disruption • Financial loss • Repair costs |