What does the term "loss event" signify in the context of ORM?

The term "loss event" in the context of Operational Risk Management (ORM) specifically refers to a situation in which operational risk results in a financial loss for an organization. This definition highlights the direct correlation between operational risks—such as fraud, system failures, or process inefficiencies—and their tangible impact on a company's finances.

Understanding a loss event is crucial for organizations as it helps in identifying, measuring, and managing the risks they face. Recognizing and categorizing such events allows organizations to analyze their root causes, implement corrective measures, and enhance their risk management framework to prevent future losses. By focusing on the financial aspect, this term encapsulates the essence of ORM, which is to minimize losses and protect the organization’s assets from risks that can occur during operational processes.