Operational risk is similar to human risk since it a risk that occurs as a result of human error in the operations of the business (Investopedia, 2007). Therefore, this type of risk always varies from one industry to another. However, it important to consider the risk by looking at the potentiality of the investment decisions. Consequently, companies with minimal interaction of human beings are likely to experience less operational risk, and this is why operational risk relates to electronic commerce.
Banking industries are more likely to face operational risk. Therefore, these financial institutions will experience some challenges regarding globalization and internet related technologies while dealing with operational risks (Savic, 2008). This is because no single section of the banking sector has changed as the area of information technology. It implies that several people are using the platform for more banking devices than before, and every user creates the vulnerability that can be potentially exploited by the cybercriminals. Therefore, the banking sector has been the target because they make a consideration on the vulnerability of giving the criminals the opening that they require. Once there is an opening, the cyber criminals are will be more likely to put the banking sector into a serious operational risk.
In managing operational risk, a company should adopt an approach that is more integrated concerning the online vigilance. Similarly, the affected industries such as bank should be able to limit their risks especially by maintaining a full spectrum of the online risks, monitoring and providing a connection of the dots between all business operations across the internet. The above procedures will be the only measures of protecting the brands, and reputation of the company against the continuous growth of online threats.
References
Investopedia, (2007). Operational Risk Definition | Investopedia. Retrieved 14 February 2016, from http://www.investopedia.com/terms/o/operational_risk.asp
Savic, A. (2008). Communication. Managing IT- Related Operational Risk, 1(5).
