Operational Risk Management: Frameworks & Best Practices For 2026

Operational risk management plays a vital role in helping organisations operate safely, compliantly, and with confidence in an increasingly complex environment.  
 
As supply chains expand, regulations evolve, and operational dependencies grow, managing risk across people, processes, systems, and third parties has become essential. 

This guide to operational risk management frameworks, processes, and best practices for 2026 provides a clear and practical overview of how organisations can identify, assess, and manage operational risk effectively. It covers key concepts, proven frameworks, and real-world best practices, with a strong focus on resilience and supply chain risk. 

Whether you are reviewing an existing approach or building an operational risk framework from scratch, this guide is designed to support informed decision-making and stronger, more resilient operations. 

Operational risk management is the practice of identifying, assessing, and controlling risks that arise from everyday business operations. These risks typically stem from people, processes, systems, third parties, or external events. 

A strong operational risk management approach helps organisations reduce disruption, maintain compliance, and protect service delivery as operations scale and become more interconnected. 

Common sources of operational risk include: 

• Human error or skill gaps/gaps in skill

• Process inefficiencies 

• System failures or outages 

• Supplier and third-party dependencies 

• External events such as regulatory change or cyber threats 

Understanding what operational risk management is - and how it applies across your organisation - is the foundation for building effective frameworks and controls. 

Read more: What Is Operational Risk Management? A Practical Definition 

Operational risk takes many forms and can affect different parts of the organisation in different ways. Identifying these risk types early helps prioritise controls and mitigation efforts. 

The most common types of operational risk include: 

• People risk – skills gaps, insider threats, human error 

• Process risk – weak controls, inconsistent procedures 

• Systems risk – IT outages, cyber incidents, data loss 

• Third-party risk – supplier failure, compliance gaps 

• External risk – regulatory changes, natural events 

Each category requires a tailored response, but all should feed into a single operational risk management framework to ensure consistency and visibility.

Read more: Types of Operational Risk: Examples And Categories Explained

Operational risk management is no longer optional. Regulatory expectations, operational resilience requirements, and increasing supply chain complexity mean organisations must actively manage risk across their operations. 

Without a structured approach, operational risks can lead to: 

• Service disruption and downtime 

• Regulatory breaches and fines 

• Reputational damage 

• Increased costs and inefficiencies 

In 2026, organisations are expected not only to manage risk, but to demonstrate control, accountability, and preparedness. Operational risk management plays a key role in meeting these expectations and supporting long-term resilience. 

Read more: Why Operational Risk Management Is Critical in 2026

Operational risk management and risk and compliance are closely linked, but they are not the same. Understanding the difference helps clarify ownership and responsibilities. 

• Operational risk management focuses on identifying and mitigating risks that affect day-to-day operations 

• Risk and compliance focuses on meeting legal, regulatory, and policy requirements 

Effective organisations align both functions so operational risks are assessed through a compliance-aware lens, without turning risk management into a box-ticking exercise. 

Read more: Operational Risk vs Risk And Compliance: What’s The Difference?

Operational risk management frameworks provide structure and consistency for managing risk across the organisation. They define how risks are identified, assessed, controlled, and monitored. 

Most frameworks include: 

• Risk identification and classification 

• Risk assessment and scoring 

• Control design and ownership 

• Ongoing monitoring and reporting 

While frameworks may vary by industry or regulation, the goal remains the same: to embed risk awareness into everyday decision-making.

Read more: Operational Risk Management Frameworks Explained

An effective operational risk framework aligns risk management with business objectives, governance structures, and operational reality. 

Key components include: 

• Clear ownership and accountability 

• Standardised risk assessment processes 

• Defined controls and escalation paths 

• Regular review and continuous improvement 

A well-designed framework supports better decision-making, improves visibility, and ensures operational risk management is applied consistently across teams and suppliers. 

Read more: How To Build An Operational Risk Framework Step By Step

Operational risk often extends beyond your organisation into your supply chain network. Suppliers, partners, and service providers can introduce significant risk if not properly assessed. 

Common supply chain risks include: 

• Delivery failures 

• Compliance gaps 

• Cyber and data security weaknesses 

• Capacity or financial instability 

Identifying these risks early is essential for maintaining operational continuity and resilience. 

Read more: How To Identify Operational Risk Across Your Supply Chain Network Network

Supply chain and risk management are tightly connected. Disruption at any point in the supply chain can quickly become an operational risk for your business. 

Effective supply chain risk management focuses on: 

• Visibility across suppliers 

• Consistent risk assessments 

• Ongoing monitoring 

• Clear escalation processes 

Integrating supply chain risks into your operational risk management framework improves resilience and decision-making. 

Read more: Supply Chain And Risk Management: A Practical Guide

A resilient supply chain strategy balances efficiency with risk awareness. It focuses on preparing for disruption, not just responding to it. 

Key elements include: 

• Diversification of suppliers 

• Contingency planning 

• Clear risk ownership 

• Alignment with operational resilience goals 

Resilience-focused strategies help organisations adapt quickly and maintain service continuity. 

Read more: Supply Chain Strategy For Operational Resilience

Operational resilience risk focuses on an organisation’s ability to continue delivering critical services during disruption. It builds directly on operational risk management principles. 

This includes: 

• Identifying important business services 

• Understanding impact tolerances 

• Mapping dependencies across people, systems, and suppliers 

Operational risk management provides the foundation for managing resilience risk effectively.

Read more: What Is Operational Resilience Risk?

An operational resilience policy sets out how an organisation prepares for, responds to, and recovers from disruption. It supports governance, accountability, and regulatory expectations. 

A strong policy typically covers: 

• Roles and responsibilities 

• Risk assessment requirements 

• Testing and scenario planning 

• Reporting and review cycles 

Clear policies help embed resilience into everyday operations. 

Read more: Operational Resilience Policy: What Organisations Need

Operational risk management best practices continue to evolve. In 2026, successful organisations focus on integration, visibility, and continuous improvement.

Best practices include:

• Embedding risk into decision-making
• Aligning operational risk and resilience
• Strengthening third-party oversight
• Using consistent frameworks and processes

These practices support sustainable, resilient operations.

Read more: Operational Risk Management Best Practices

Let’s face it, managing operational risk can feel overwhelming. You’re under pressure to deliver, and you need partners you can count on. That’s where JOSCAR comes in.

JOSCAR is a trusted platform used by major organisations in defence, aerospace, and security. It helps you quickly find suppliers who meet the highest standards - without wasting time chasing paperwork or repeating the same checks.

• See how JOSCAR simplifies operational risk management
•  See how BAE Systems use JOSCAR to get visibilty of Scope 3
• Learn more about JOSCAR in the UK
• Learn more about JOSCAR in Australia 

In complex supply chain environments, operational risk management depends on clarity, consistency, and reliable supplier data. JOSCAR provides the foundation for stronger third-party oversight and more resilient operations.