Enterprises’ Financial Performance and Operational Risk Management: A Theoretical Assessment of the Literature

Abstract

The scope of the operational risk phenomena and its management has been made clear, among other things, by scandals that have happened in the financial sector. It has become crucial to implement an operational risk management system because performance cannot be achieved without having addressed the operational risk management-related issues. Operational risk management is a process by which businesses identify and evaluate the risks impacting their business. Performance is the culmination of an organization's efforts to reach its goals in the field of management. In fact, due to the negative effects of this kind of failure on a company's performance and stability, operational risk has a significant impact on the performance of a firm, regardless of its industry of operation. The purpose of this article is to examine the impact of operational risk management on the financial performance of companies to review the literature and determine whether risk management has a positive or negative impact on financial performance.