Operational Risk refers to potential losses from operational events such as poorly trained employees, a technological breakdown, or theft of information.

Operational Risk refers to potential losses from operational events such as poorly trained employees, a technological breakdown, or theft of information.

• A. Losses that result from operational events, such as poorly trained employees, a technological breakdown, or theft of information
• B. Losses from market fluctuations affecting asset prices
• C. Losses due to regulatory penalties
• D. Losses from currency devaluation

Answer: (B)

Operational risk is the risk of loss resulting from internal processes, people, systems, or external events. The example given—losses arising from poorly trained staff, a technological breakdown, or theft of information—fits this definition because it stems from how the organization operates rather than from market movements or external penalties. In contrast, losses from market fluctuations relate to market risk, penalties touch on regulatory or legal risk, and currency devaluation involves currency risk. So the statement describing losses from operational events aligns with operational risk.

Operational risk is the risk of loss resulting from internal processes, people, systems, or external events. The example given—losses arising from poorly trained staff, a technological breakdown, or theft of information—fits this definition because it stems from how the organization operates rather than from market movements or external penalties. In contrast, losses from market fluctuations relate to market risk, penalties touch on regulatory or legal risk, and currency devaluation involves currency risk. So the statement describing losses from operational events aligns with operational risk.