ERM Glossary: Operational risk

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Operational risk relates to the risk of losses resulting from inadequate or failed internal processes, people and systems.

It is often also deemed to include risks from externals events, particularly when risks are being categorised in a three-way subdivision involving ‘market risk’, ‘credit risk’ and ‘operational risk’ (with ‘operational risk’ then being deemed to be the residual item covering all risks other than market and credit risk).

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