TEAM ONE: BUSINESS DISRUPTION AND SYSTEM FAILURE

KERVIEL ASSET MANAGEMENT

Introduction

Risk is defined by the Institute of Risk Management (IRM) as the sum of an event's probability
and its outcome. Outcomes can be both beneficial and harmful. Defining risk management also
as a process that seeks to assist companies in understanding, evaluating, and dealing on all of
potential risks in order to increase the possibility of success while decreasing the chance of
failure.

One type of risk is operational risk, which is related to how successfully a company executes its
fundamental operations such as value chain management, customer interactions, delivery of
services, and so on.

To outperform the competition, one must take more risks, but they must be calculated risks
which means the accepted risk is known as well as its impact. Unintentional risk-taking is
unacceptable because it leads to unclear duties and a limited understanding, subjecting the
company to extreme risk. (Hopkins, 2017)

Firms must prioritize operational risk management in order to get on with much higher credit
ratings and associated savings in total financing costs, as well as to guarantee correct and
adequate capital is retained. As a result, effective management of operational risk contributes to
the overall risk culture, which is a crucial element of contemporary and successful firms.
(GrantThornton, n.d.)