What aspect of risk management does operational risk primarily focus on?

Operational risk specifically focuses on the internal processes and systems of an organization. This risk arises from failures in processes, people, or systems that can lead to losses. It includes risks associated with inadequate or failed internal processes, human factors, technological issues, and other operational failures that can disrupt business operations.

By concentrating on the internal workings of the organization, operational risk management aims to identify potential weaknesses and implement controls to mitigate those risks, ensuring the organization operates smoothly and effectively. For example, a company might analyze its supply chain processes to identify bottlenecks or potential areas for failure, thereby minimizing disruptions and losses.

Focusing on this internal perspective is essential for organizations to ensure that they are managing their resources effectively and maintaining operational efficiency. Other options like the external market environment or the geopolitical landscape pertain to different types of risks and do not directly address the internal dynamics that operational risk encompasses.