CRMA Practice Exam 2025 – Complete Certification Preparation

Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events. This definition encompasses a broad range of potential issues that can arise within an organization, including failures in technology, breaches of process, human errors, and unexpected external events such as natural disasters or regulatory changes.

Operational risk is a crucial component of risk management because it directly relates to the day-to-day functioning of an organization. Understanding this risk is vital for establishing effective controls and responses to mitigate potential losses. By recognizing that operational risk can stem from both internal and external factors, organizations can better prepare and implement strategies to minimize disruptions and enhance resilience against various types of failures.

In contrast, other options focus on different aspects of risk. For instance, the risk associated with fluctuations in market prices pertains to market risk, which is not covered under operational risk. Similarly, non-compliance with legal regulations represents a compliance risk, while project overruns relate to a risk management aspect associated with project management. Therefore, the definition found in the correct option accurately captures the essence of operational risk as it applies across different scenarios in organizational operations.