What does "operational risk" involve in BO training?

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, systems, people, or external events. In the context of back-office (BO) training, understanding operational risk is crucial because it encompasses a variety of issues that can adversely affect the functioning of the organization. This includes technology failures, human errors, fraud, or any issues arising from a lack of competent internal processes and controls.

By focusing on the risks associated with internal processes and systems, individuals in BO positions can identify potential weaknesses or vulnerabilities that may lead to operational disruptions or financial losses. Proper training in operational risk management ensures that employees are equipped to implement the necessary controls and responses to mitigate these risks effectively, thus maintaining the stability and integrity of the organization's operations.

The other options describe different types of risk that are not considered operational risk. For instance, risks related to market changes pertain to market risk, customer behavior encompasses aspects of credit and market risks, while risks from external market forces may also be categorized under different regulatory or environmental risks rather than operational risk. Knowing these distinctions helps professionals in financial institutions navigate various risks effectively.