There have been several articles expressing a lot of interest and concern recently about operational risk (OR) and what it means to your organization. However, most of the articles deal with the mechanics of OR, instead of with how to mitigate or even eliminate it. Thus, it's time we take a long hard look at OR and understand that business intelligence (BI) is your best mechanism to reduce overall risk to the corporation's operations.
First, let's start with a basic definition of OR so we're all on the same page. According to the Office of the Comptroller of the Currency (OCC), OR is the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.1 It includes failure to comply with laws (legal risk) and the failure to comply with prudent ethical standards and contractual obligations. The well-documented examples of OR are:
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