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Northcentral Technical College *
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Course
10801155
Subject
Information Systems
Date
Dec 6, 2023
Type
docx
Pages
5
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Operational Losses Cannot Be Broadly Managed
Operational losses have occurred during the lockdown of operations within a
business. There are
many reasons
Loss from these operational risk episodes can be catastrophic, not just in a strictly
monetary sense, but in terms of the impact on the LTD acceptance overall
business and
reputation, sometimes threatening its very existence. However,
losses cannot be broadly
managed due to predictable disasters, human errors, and many operational risks.
It cannot be
mitigated where we realize as beta risk (unsystematic risk). Thus the risk is only be
diversified.
Category
In general, possible failures can be classified as a result of the "high frequency and low
efficiency" function, e.g., small accounting errors or errors made by bank employees,
and the
"low frequency and high efficiency" function, e.g., attacks on merchants or major
business
disruptions. Data on errors caused by the HFLI functions are usually available through
the LTD's
internal classification structures. Therefore, it should be possible to demonstrate and
plan for
these common failures in the future due to operational risks. However, the HFLI
functions are
unusual in that they limit a single bank to sufficient data for display. These functions may
require
LFHI recognition to improve data quality with data from different companies. Some
private-
sector activities, such as the World Database on Operational Losses controlled by the
Association, are currently included in this database.
Potential Losses
Internal fraud
The Association's manifestations of blackmail go against its merits. Lack of luck can
result from
expectations of fraud, allegations of non-compliance, misappropriation of assets, forgery,
bribery,
intentional seizure, and theft
.
IdentityTheft
The theft of a customer's identity is an increase in the balance sheet base. In March, a
deceptive
plan was for agents within banks to use stolen customer IDs to open bank and credit
accounts. In
The unlikely event that a meeting is held in violation of this obligation is defined as a
fiduciary
duty breach. It may result in legitimate business in the civil courts.
Damage to physical assets
It is a judgment caused by damage to physical property due to natural disasters or the
performance of various functions, such as illegal prosecution and vandalism. Violent
and
unforeseen weather conditions have been a constant concern for the economy in
modern history
for more than ten years.
Changes in the economic situation Inappropriate work/activity strategy.
Vandalism
Intentional destruction of property is defined primarily as vandalism. Behavior such as
breaking
windows, cutting tires, splashing partitions, and destroying the computer's structure with
an
infection. Vandalism is a malicious phenomenon and can reflect individual hostility,
although
offenders do not need to have the slightest idea about their victim to submit to
vandalism. The
madness of the demonstrations is characterized by both planning and revenge.
Natural Disasters
There are two main types of natural disasters: those accompanied by a warning and
those not
accompanied by a warning. In the case of storms and floods, it tends to have a certain
orientation
that allows it to react to the fiasco and plan during the disaster.
Business disruptions and system failures
Gaps in supply chains and business progress have always been important tests for
banks.
Structural frustrations (equipment or time), media disruption, and the use of
disincentives can
lead to business disruption and financial crises.
System
failures
Missing or delayed messages are at the heart of organized correspondence and must
be adjusted
to avoid too weak a planning structure. If LTD detection overlooks the loss of several
consecutive messages, this can lead to disappointment.
Supply-chain disruptions
Unexpected business intervention or withdrawal from the CBI can be an essential
defense line
against disruption from subsequent suppliers or customers.
Reason for managing risk
To Increase the credibility of business operations
To Increased Board competence in risk management issues
to strengthen the dynamic cycle in which risks are inserted
to Limit failures caused by inefficiently identified hazards
Early detection of illegal exercises
to Reduced compliance costs
to Reduced expected losses from future threats.
As in any significant business operation, the benefits outweigh the difficulties, but
operational
risk management is a fundamental step towards recognizing LTD, which hopes to avoid
problems that can be detrimental.
Conclusion
To conclude, the operational risk analysis and its exposure to LTD acceptance seem
as the firm
does not have an active system to ensure that its agents are using LTD
guidelines to screen
potential policyholders. Moreover, their operations are in 4 states; the claims are
also directly
dealt with by a firm. So, there is jargon in system application, the third-
party risk, policy
implication risk, and not efficiently diversifying their unsystematic risk. Thus, LTD
acceptance
should have to align its policy to the customer and adequately imply policy to
categories of
potential customers. Otherwise, it may cost the firm. Moreover, the third
parties are also
accounted for the policy implication and customer assessment for mit
Deliverable1
What business risk does LTD encounter in its day-to-day operations?
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Business risk can be determined by consumer uncertainties, inadequate profits, or
losses. LTD
business risk might include consumer preferences on weather or not purchasing a
motorcycle or
sports car is worth it. LTD might also encounter day-to-day business risks due to using
third
party companies to sell their insurance when they could do it themselves. Getting rid of
the
middleman will increase funds due to not having to pay the third-party company.
What compliance and human capital risks might LTD face?
One way to gauge how seriously a company takes its risk management process is to
look at the
human capital that is employed (Crouhy M., Galai D., & Mark R., 2014, p. 71). Some
questions
might include, whom do risk managers report to? Is there a strong ethical culture in
evidence?
This can cause the company to face negative turnover rates, causing employees to
come and go
which have direct and indirect costs. Another potential risk is occupational fraud, misuse
of an
organization's assets.
How do risk management activities correlate with overall productivity?
Risk management activities will correlate with overall productivity by giving employees
and
share holders a clear and direct understanding of risks, how they will be addressed, and
a plan to
follow.
3
Deliverable1
References
Crouhy M., Galai D., & Mark R. (2014). The Essentials of Risk Management. [Bookshelf
Ambassadored]. Retrieved from
https://ambassadored.vitalsource.com/#/books/125958982X/
DELIVERABLE 1 - DEFINING AND CATEGORIING VARIOUS FORMS OF RISK
Another area we need to address is a few daily activities involving who and how we are
writing policies.
LTD Acceptance is currently utilizing third party agencies to write policies without any
enforcement
efforts of our regulations to assure they are not putting the company at risk and in turn
creates what are
referred to as "Human Capital Risks" (HCR). While other risk I have mentioned can also
be classified in
this category It is important for us to recognize that a few are blatant and easily
recognizable. Most
notably a key element missing is open and regular communication between offices and
management in
general, the very absence of this aspect is creating another HCR in and of itself. We need
to make sure
we have a vetting process with the agencies that we allow to write policies on our behalf
since it is
possible to not only have an individual engaging in fraudulent activities but allowing a
whole third-party
agency to do so. LTD can address these issues by actively monitoring current standard
operating
procedures and enforcing violations with reprimands of the people writing the policies or
removal of
agencies with poor business practices. An issue that occurs in this industry is writing of
fraudulent
policies by both insiders looking to embezzle funds and our clients that misrepresent
themselves or their
assets we will be insuring. It is also imperative to make sure we have a stringent
evaluation process in
place before writing policies that will put the company at risk. Implementing a
knowledgeable and
complete human resources section will help implement these internal solutions. And
finally, I would
suggest forming a team to handle all enforcement and verification efforts for all third-party
agencies.
While we have been successful and had repeated profit increases the main goal of our
organization
should be not only profitability but longevity. I would like to implement these solutions
immediately, so
we can not only expand in our current niche market but to become a highly recognized
provider and
capture maximum market share on our way towards becoming a top five or better
company within a
reasonable time period. Our company will need to implement weekly middle management
and monthly
senior level management