What are operational risks?

Operational risks refer specifically to the risks that arise from the internal processes, people, and systems within an organization. These can include a variety of incidents, such as failures in internal controls, mismanagement of resources, human errors, or technological breakdowns. This understanding is critical in managing a company's efficiency and effectiveness, as operational risks can directly impact the ability to achieve business objectives.

In contrast, the other options focus on external factors or specific types of risks that do not encompass the internal dynamics of a company. Risks from changing market conditions relate to market volatility and competition, risks associated with financial investments often pertain to market performance and investor returns, and risks related to external economic factors address broader economic influences outside the organization. However, operational risks are distinct in that they stem from the company’s own operations rather than from the external environment or financial aspects.