The Importance of Operational Risk

The purpose of this paper is to discuss the different types of risk and general approaches to analyze risk in a company, and to describe the importance of implementing a formal risk management policy in a company. Business risks are diversifiable and specific to the industry and the market in which a firm operates. Part of the business risk is operational risk which incorporates the direct or indirect loss resulting from inadequate or failed internal process, people and systems or form external events. The paper explain the components of operational risk and situation of his appearance, as well as the steps for creating risk management policy.