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OPERATIONAL RISK MANAGEMENT FRAMEWORK FOR SERVICE OUTSOURCING: CONSIDERATION OF RISK DIMENSIONS AND THEIR APPLICATION INTO THE FRAMEWORK
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As outsourcing is becoming mandate for today’s business, there has been a variety of
researches taking place. This paper discusses on managing operational risks in an
organization where one or more business processes are being outsourced. We first review
on changing nature of operational risks not only in outsourced process itself, but also
among any other interrelated processes. Then a conceptual operational risk management
framework is introduced. The framework combines the advantages of Key Risk Indicator
Framework and Bayesian Network Causal Modeling concepts. The detailed development
process is discussed in five phases along with the development tools and their applications.
This paper concludes with the comparison of proposed framework with other existing
operational risk models.