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The possibility of loss from failed processes, people, systems or external disruptions.
Controls aim to prevent mistakes, detect problems and limit their consequences. Examples include separating approval duties, reconciling records, maintaining secure access and testing recovery arrangements. A control can lower the likelihood or severity of a failure without removing risk completely. Dependencies on outside providers can also create operational exposure.
Imagine a payment system that sends the same transfer twice because a retry is processed as a new instruction. The business may need to recover the duplicate payment, compensate a customer and repair its records. A unique transaction identifier and duplicate-checking process could prevent that specific failure. The loss arises from processing, not from an agreed loan repayment becoming overdue.
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