In today’s environment, market risk tends to receive the most attention from the media and from stakeholders, but managing operational risk has become more important as plans have grown in size and complexity.
Many experts believe operational risk, rather than market risk, is the leading threat to a plan’s reputation due to the breadth and complexity of the individual risks in this category.
For defined contribution plans, operational risk encompasses potential losses attributable to failures in Internal Revenue Code (IRC) compliance, participant financial reporting, transaction processing, data security, technology, business continuity and vendor management.
Effectively managing operational risk may lead to improved service quality, reduced costs, improved participant decision making and strengthened compliance. A first step is adopting a framework that includes:
Our team can help you reap these benefits by coming up with a plan that will reduce your operational risk.
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