What are the three kinds of risk identified in risk management?

The identification of operational, market, and credit risk encompasses the core dimensions of risk management in financial contexts.

Operational risk refers to the risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events. This aspect is crucial for organizations as it addresses the effectiveness of operations and the potential impact of disruptions on financial health.

Market risk pertains to the potential losses that can occur due to fluctuations in market prices, including interest rates, currency exchange rates, and commodity prices. This type of risk is fundamental to financial institutions as it can significantly affect their asset valuations and liability management.

Credit risk involves the possibility of loss stemming from a borrower's failure to repay a loan or meet contractual obligations. It is a critical area in risk management, particularly for banks and lending institutions that need to assess the creditworthiness of their counterparties to mitigate potential losses.

Understanding these risks helps organizations develop strategies and controls to manage and mitigate their exposure effectively. The other options do not accurately capture the essential categories of risk commonly recognized in the financial sector, which is why they are not the correct choice.