An effective approach to handling operational uncertainties involves creating a structured system designed to identify, assess, monitor, and control risks inherent in a business’s daily activities. This system incorporates policies, procedures, and practices that work together to minimize potential disruptions, financial losses, and reputational damage arising from operational failures. For example, a bank might implement a control framework to manage the risk of fraud by establishing clear segregation of duties, transaction monitoring systems, and regular audits.
The establishment of such a system is crucial for organizational stability, regulatory compliance, and shareholder value protection. Historically, inadequate management of operational vulnerabilities has led to significant financial crises, highlighting the need for proactive measures. A robust system not only mitigates negative outcomes but also enhances operational efficiency, builds trust with stakeholders, and strengthens the overall resilience of the organization.
