Which of the following is an example of operational risk?

Question

BlackTom AI · Accepted Answer

To analyze the question, I will evaluate what is meant by operational risk and then apply that lens to each option.
Option 1: 'Inability to document process' — This represents a failure in process management and control, which can lead to failures in daily operations, errors, and inefficiencies. It directly affects how smoothly operations run and is a classic example of operational risk.
Option 2: 'Lack of employee motivation' — While this affects performance and productivity, it is typically categorized as an HR or people risk rather than a core operational risk category. It influences operations indirectly, but the primary classification would not be operational risk alone.
Option 3: 'Intellectual property disclosed to competition' — This concerns information security and IP protection. It falls under information risk, competitive risk, or security risk, rather than operational risk, though it can impact operations in severe cases. The main focus here is safeguarding assets, not the operational processes themselves.
Option 4: 'None of the answers offered is correct' — Given that option 1 clearly aligns with operational risk, this statement is incorrect. The presence of a valid example means this option does not hold.

In summary, among the choices, 'Inability to document process' best fits the definition of operational risk by highlighting weaknesses in process documentation and control that can disrupt normal operations. The other options point to risks that are more accurately categorized under HR, information security/IP, or simply misfit the operational-risk framework.}

Which of the following is an example of operational risk?

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