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Operational Risk Management and the Cost of Implementing Risk Management Systems

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Explain why operational risk is important. Though the cost of implementing a new operational risk management system is expensive, determine why it could also improve the efficiency of financial institutions from a business perspective.

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This solution explains why operational risk management is important, and why it could also improve the efficiency of financial institutions from a business perspective. Includes 2 references.

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Operational risk is a broad term that defines the risks that are undertaken from failure in various parts of the company's operations. These risks are primarily associated with the main facets of operations, managerial practices, internal control, and business strategy. Any number of internal or external factors can cause a failure in any of these areas. When this happens, the company is exposed to operational risk. Operational risk is therefore ...

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