What is ‘Operational Risk’. Explain the significance of Operational Risk. Discuss the methodologies used for measuring Operational Risk.

Operational risk is the potential for loss resulting from inadequate or failed internal processes, systems, people, or external events. It encompasses a wide range of factors, including human error, technological failures, fraud, legal risks, and external events like natural disasters. In the context of bank financial management, operational risk poses a significant threat to the stability, profitability, and reputation of financial institutions.

The significance of operational risk in banking lies in its capacity to cause financial losses, disrupt operations, damage reputation, and erode investor and customer confidence. Unlike market or credit _____ ___ _________ _____ __________ ______ ________ ____ _____ ______.
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