What does the term “near miss” refer to in operational risk?

The term "near miss" specifically refers to an event that had the potential to cause a loss but ultimately did not result in any actual loss. This concept is important in operational risk management because near misses often provide valuable insights into potential vulnerabilities within systems and processes. Organizations can analyze these incidents to understand what went wrong, identify weaknesses, and implement preventive measures to mitigate future risks. A near miss serves as an indicator that there are underlying issues in operations that need to be addressed to avoid possible losses in the future.

By focusing on near misses, organizations can proactively enhance their risk management strategies and improve their overall resilience against operational failures. This approach emphasizes learning from incidents that could have been damaging, thereby reinforcing better preparedness and response in the operational landscape.