Process Risk
Process Risk is considered to be a sub-component of operational risk. It exists when the process that supports a business activity lacks both efficiency and effectiveness, which may then lead to financial, customer, and reputational loss. This form of risk may be present within any stage of a business transaction. For instance, an error in pricing may be seen as loss in sales revenue, while a disruption in the fulfillment process may cause financial losses in terms of production quality and customer relationships. The majority of operational risk events occur due to losses from ineffective processing of business transactions or process management, and from inadequate relations with trade counter parties and vendors. Definition Process risk is a loss in revenue as a result of ineffective and/or inefficient processes. Ineffective processes hamper the achievement of the organization's objectives, whereas the processes that are inefficient, may be successful in achieving objectives, y ...
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