Operational risk is the risk that one or more future events will impair the effectiveness or viability of the business model in creating value for customers and achieving expected financial results. These risks relate to the various activities along the value chain within which the organization’s business model operates.

What would happen to the organization’s business model if any critical component of the value chain were taken away or altered in a significant way through either a process failure or an unexpected catastrophic event? In this issue of Board Perspectives: Risk Oversight, we discuss key considerations when evaluating operational risks.