Professional Ethics - Operation risks

Can anyone give me good explanations for the operational risks?
The most important two are process and system, anything similar to what AAT have provided for fundamental principles would be great, they've not done anything for operational risks.
Thanks in advance.


  • LearningAcademy
    LearningAcademy Registered Posts: 18
    Hi Julia

    Operational risks are made up of six categories of risks:
    1) Reputation risk – this is all about the name, image (including brand) of an organisation getting affected.
    2) Process risk – this is about how an organisation operates. Its process may become redundant due to changes in law, customer preferences or technology.
    3) People risk – this is about adverse effect due to the people associated with the organisation.
    4) Systems risk – this about the risk due to computer systems failure, breakdown, obsolescence etc. It also includes loss of data and vital information due to unauthorised access.
    5) Legal risk – with the business world getting complex day by day, many organisations are involved in the legal battles and are exposed to the risk.
    6) Event risk – this is about the risk due to something (mainly external) happening or not happening.

    Some of these risks have secondary effects. For example, people risk may lead to legal risk and eventually to loss of reputation as well.

    Chapter 7 of Osborne Books Tutorial Book covers this quite well.

    Trust, this helps.
  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
    Recently there was an accident at Alton Towers

    what operational does it pose for Alton Towers?

    1 - Reputation risk - for obvious reasons
    2 - Legal Risk - breach of Health and Safety rules - consequences - Prison.Fine - breach of statutory act/law
    3 Litigation risk - those customers who were injured will sue Alton towers for damages due to negligence

    Few months a go a plane deliberately crashed into Alps mountains

    what operation risk does it pose for the airline company?

    1 - Reputation risk
    2 Legal Risk - authorities will want to satisfy that the company has not breached any any legal due process (ensuring that pilots were fit to fly the plane etc)
    3 litigation Risk - families will sue for negligence and damages
    4 process risk - why was there only one pilot in the cockpit
    5 systems risk - few years back airlines were required to have 3 pilots to fly the pane but at some point they changed to 2 pilots. this has exposed the company to a higher risk
    6 People Risk - Pilot was suffering from a mental illness and deliberately flew the plane into the mountains

    Just few days back tourists were murdered on a Tunisian beach

    what operational risk does this pose to holiday tour operators?

    Event Risk - up until this incident nobody would have anticipated this risk in the holiday tour operator company.

    other risks as well ........
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