Operational risk is the risk of one or more future events impairing the effectiveness or viability of the business model in creating value for customers and achieving expected financial results. These risks relate to the various business activities along the value chain within which the organization’s business model is applied. Generally, an operational assessment is directed to assessing performance against quality, time, innovation and cost targets to identify critical gaps.

This issue of Board Perspectives: Risk Oversight discusses the appropriate risk assessment approach to take for operational risk, which should be focused on understanding the risk of loss of any of the key links in the value chain.