The process that has the highest Operational Risk is typically

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BlackTom AI · Accepted Answer

Let’s revisit the question in our own words: The prompt asks which process has the highest Operational Risk.
Option 1: 'Hard to document and measure' suggests that the process is difficult to record and quantify. While that describes a challenging aspect, it emphasizes documentation and measurement separately, and uses 'document' rather than 'codify,' which can lead to confusion about how formalized the process is.
Option 2: 'Easy to document but hard to measure' presents a scenario where capturing procedures is straightforward, but assessing their effectiveness or risk is tricky. This contrasts with the idea of high operational risk arising from both codification and measurement challenges.
Option 3: 'Hard to codify and somewhat hard to measure' implies a dual difficulty: formalizing the process into codified standards (which reduces ambiguity and risk when feasible) is especially challenging, and measurement is only moderately difficult. This combination aligns with many operational risk considerations, where lack of codification increases exposure and imperfect measurement obscures risk levels.
Option 4: 'Portable and transferable' describes a property of a process rather than its risk profile. While portability and transferability can affect risk in certain contexts (such as when moving processes across environments), these traits do not directly express the level of operational risk itself.
A subtle but important distinction lies in what drives operational risk: processes that are hard to codify tend to be less standardized, more discretionary, and therefore carry higher risk due to inconsistent implementation. If measurement remains only somewhat hard, organizations may still under-detect issues, compounding risk. Conversely, processes that are easy to document but hard to measure can be standardized superficially yet still conceal real performance gaps. The framing of Option 3 captures the core risk driver—difficulty in formalizing the process—while acknowledging that measurement is not utterly intractable, which is a realistic portrayal of many operational risk scenarios.
In summary, the option that describes difficulty in codification combined with only moderate measurement difficulty best matches the typical characterization of high Operational Risk, as it highlights the central challenge of achieving consistent, well-defined procedures alongside adequate risk visibility.
Note: If we compare with Option 1, the emphasis on documentation alone misses the codification aspect, which is a critical driver of risk when formal standards are lacking. Comparing with Option 2, the 'easy to document' portion reduces the perceived risk associated with formalization, which contradicts the idea of highest risk. Option 4 moves away from risk characterization entirely, focusing on utility rather than risk level. The line of reasoning across these options supports the interpretation that Option 3 best aligns with high Operational Risk due to codification difficulty and only partial measurement challenges.

The process that has the highest Operational Risk is typically

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