Near Misses in Operational Risk
Anear missis an event that could have led to a loss but wasavoided or mitigatedbefore actual financial impact occurred.
PRMIA emphasizes that near misses should bereported, recorded, and analyzedbecause they provide valuable insights intopotential vulnerabilitiesin risk controls.
However, since they did not result in actual financial losses,they are not included in the calculation of Operational Risk Capital.
Opportunity Costs in Operational Risk
Opportunity costsrefer to theloss of potential gainsdue to missed strategic opportunities.
These arenot directly quantifiable as operational risk lossesand are not included in Operational Risk Capital calculations.
PRMIA’sOperational Risk Frameworkstates thatoperational risk is about actual lossesrather than theoretical costs.
Why Other Answers Are Incorrect
Option
Explanation
A. Ignored.
Incorrect– Near misses and opportunity costs provide valuable insights into operational risk, so they should never be ignored.
B. Recorded and Analyzed. Used in calculation of Operational Risk Capital.
Incorrect– While they should be recorded and analyzed, they arenot included in Operational Risk Capital calculationsbecause they do not result in actual losses.
D. Reported, Recorded, and Analyzed, Used in calculation of Operational Risk Capital.
Incorrect– Reporting, recording, and analysis are correct, but theyshould not be included in capital calculations.
PRMIA Operational Risk Management Standards– Defines near misses and opportunity costs.
Basel II & III Operational Risk Framework– Outlines the principles of operational risk capital calculations.
PRMIA References for Verification
