Another form of risk associated with forex trading is operational risk. Operational risk takes place when internal processes, systems and people are involved. In addition, operational risk can be include legal risks, fraud and security.
Operational risk and management usually go hand in hand. When a broker, for example, has a strong management team the degree of operational risk decreases. Conversely, when management is weak within a business environment, operational risk increases.
As a forex trader it is not always easy to determine the amount of operational risk that you are exposed to, however, as a trader it is your responsibility to research and evaluate a business’s operation in an effort to reduce operational risk as much as possible.