Operational risk is the collective term for the diverse inherent risk to any business practice. It includes people, processes, systems, and natural disaster risks.

Such risks can range from extreme events, such as terrorist attacks, to the most common failures in project management. According to the Basel Committee on Banking Supervision (BCBS), ‘Operational Risk is the risk of direct or indirect loss resulting from inadequate, or failed internal processes, people and systems, or external events.’