3 Strategies That Help To Manage Operational Risk


Every single manager has to focus on the possibility of operational risk, which is “the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events.”

An earthquake that topples a warehouse, ruining all inventory, is a type of operational risk. Improperly trained employees that cause an accident hurting themselves is another type of operational risk.

Although you cannot prevent all types of risks, there are strategies to mitigate them.

Cyber Security

Today, one of the biggest challenges that companies face has to do with cyber security.

For example, US retailer Target lost over 250 million dollars as a result of a data breach in 2013.

Hackers can access private and/or sensitive company information and conduct data breaches or commit cyber-attacks on your organisation’s software.

“Service attacks, website defacements, access to sensitive information and attacks on critical infrastructure” are all challenges that managers must be prepared for.

To protect your business, follow The UK intelligence agency, Government Communications Headquarters’ (GCHQ), “10 Steps to Cyber Security.”

Hire IT professionals and cyber security experts to protect you and your staff from a cyber attack.

Create Processes

Many operational tasks are complex, which is where most issues occur.

When employees don’t fully understand what they are supposed to do, they will make mistakes, hurting productivity, failing to meet deadlines and curtailing profits. In some cases, a safety concern can occur if staff members don’t follow directions because they couldn’t comprehend them.

It is advantageous to review tasks and responsibilities and create simple and concise steps that employees can follow.

Although the processes you create can seem easy enough to you, you should test them on your staff before fully implementing them.

Ask your employees to follow the procedures without any input from you to see if they can follow along with the steps effortlessly. After observing them, you can modify the processes as needed.


Regardless of how prepared you may be, operational risk can still occur, which has forced many companies out of business because they couldn’t compensate for their losses.

Having an insurance policy can provide you the peace of mind that your business will be covered should the unforeseen occur.

There are different policies you may need, such as property insurance or personal liability, which is why it may be helpful to discuss your options with a trusted insurance company representative.

Thanks again

Mark Williams

Head of Training and Development

MTD Training | Management Blog | Image courtesy of Big Stock Photo

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