OPERATIONAL RISK is the risk of loss resulting from inadequate or failed internalprocesses, people, systems, or from external events (IAA, 2004). This concept has primarily emerged from the banking industry and the Basel II project.

It can be seen as consisting of more or less all risks other than insurance, market, credit, and liquidity risks. There is no unique definition of what is to be understood under operational risk although many existing systems equate it, for instance, to a collection of exposures to