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Operational Risk

Risk of loss arising from failures in internal processes, systems, personnel, or external disruptions.

Operational risk is the potential for loss arising from failed processes, systems, or human error, rather than market movement.

In oil trading, operational risk includes mismanaged logistics, data errors, regulatory noncompliance, or technology failures. Even small lapses can trigger financial or reputational loss.

Mitigation involves robust procedures, audits, and contingency planning. Traders and firms prioritize operational risk alongside market and credit risk.

Effective management ensures reliability and confidence in trading operations.

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