Operational risk
The risk of losing money to a broken process rather than to a price move: a mistyped order, a dead terminal, an unreachable broker, a corporate action processed wrongly.
How to read the number
The one kind of risk a private investor controls directly — by checking order parameters, capping size and keeping a second route to the account.
When the metric lies
It is invisible in a performance report. A loss caused by the wrong quantity looks like a market loss and gets written off as bad luck, while the cause was procedural.
Also known as: process failure risk