MANAGEMENT

Detailed explanation-1: -There are five categories of operational risk: people risk, process risk, systems risk, external events risk, and legal and compliance risk.

Detailed explanation-2: -Operational risk can occur at every level in an organisation. The type of risks associated with business and operation risk relate to: • business interruption • errors or omissions by employees • product failure • health and safety • failure of IT systems • fraud • loss of key people • litigation • loss of suppliers.

Detailed explanation-3: -The Basel Committee defines operational risk in Basel II and Basel III as: The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk.

Detailed explanation-4: -This is included in the category of financial risk. There are at least 4 risks included in it, namely income risk, expenditure risk, asset or investment risk, and credit risk.