What are some common methods to control operational risk?

The answer highlights effective methods for controlling operational risk, primarily through the implementation of segregation of duties and regular audits. Segregation of duties is a key internal control mechanism that ensures no single individual has control over all aspects of a financial transaction or operational process. This division of responsibilities reduces the risk of error or fraud, as it requires collaboration and oversight among multiple individuals.

Regular audits serve as a critical means of monitoring processes, assessing compliance with policies and regulations, and identifying areas for improvement. These audits can take the form of internal assessments or external reviews and play a vital role in ensuring that operational practices are aligned with organizational standards and designed to mitigate risk.

Both of these methods work hand-in-hand to create a robust framework for risk management, fostering a culture of accountability and transparency within the organization. This approach not only helps identify and manage potential risks but also enhances the organization’s overall operational efficiency and reliability.