The phrase operational risk management refers to an ongoing cycle of control that comprises risk assessment, risk selection, decision making, and subsequent implementation of effective risk control measures, which eventually lead to reduction, acceptance, or avoidance of future risk. The basic premise of this process is that a company must be able to identify, evaluate, and assess the risks in its operations. The ultimate objective of this is to ensure that operational risk is managed so as not to become an impediment to achieving company goals. Although there are many concepts involved in operational risk management, one of the most commonly encountered is the concept of a business plan. A business plan is essentially a comprehensive assessment of the operations of a company that aims to achieve the goals of the business while ensuring that all of the risk is properly managed. See drivingoe.com. An overview of the basics of operational risk can be found below: risk can occur in a variety of ways; for example, risk may be associated with product or service selection, human resource management, manufacturing processes, or environmental risk. There are various types of business plans, some of which may include business systems, business analysis, business risk and business control. These are just some examples of the type of plans that are designed for operational risk management. A variety of criteria must be considered when evaluating business plans for operational risk. While some of the considerations include: Other considerations include the cost per loss, the amount of money required to reduce or prevent the risk, and the time needed to do all of the necessary steps to successfully reduce or avoid the risk, including research and development, product and service design, operation monitoring, compliance with applicable legal and regulatory requirements, and other activities. Other considerations may also include the costs associated with establishing or modifying the plan. This is a type of evaluation that involves a detailed analysis of each of these elements so as to help a business determine whether it is possible to develop a feasible strategy to reduce the risks, while maintaining or improving profitability. For more click here! While a business plan for operational risk may be used for a number of different purposes, such as evaluating the effectiveness of the risk management program, evaluating whether or not the business is still viable, evaluating the overall operations of the business, etc., it is primarily utilized for one reason: to show the business owner the severity of the risks associated with the business, as well as how the risk management program can be improved or modified to alleviate the risks or at the lowest cost. The goal of all of this is to show the owner that their company is highly exposed to risks, and what the risks are, and what steps need to be taken to mitigate those risks. A complete business plan will include an overview of the risks, the severity of the risk exposure, and how the risk management strategy can address the risk, all with the goal of decreasing the risk exposure. A comprehensive business plan should be designed to provide an assessment of each risk in the business, and an outline of all steps that need to be taken to reduce or avoid the risk, as well as recommend methods and processes to reduce or avoid the risk in the future. A complete business plan will also detail the overall strategy of the plan in order to provide the owner with the information needed to monitor the progress of the strategy and monitor the impact of the strategy on the business. See more here: https://youtu.be/cYrirJunfFU
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