Operational risk refers to any potential loss that can occur when an organization undertakes business activities. It encompasses various forms of hazards that may arise from internal or external sources. Examples include human error, system failures, fraud, natural disasters, terrorist attacks, and cybercrime. Repeated exposure to such risks has the power to influence how people think and act in their workplace. Research suggests that operational risk shapes moral judgment and relational commitment through several mechanisms.
Moral Judgment
Repeated exposure to operational risk may lead to desensitization among employees. This phenomenon occurs when individuals become less sensitive to risky situations because they are repeatedly exposed to them. As a result, they begin to view these circumstances as normal and acceptable, leading to a decrease in ethical standards.
If a financial institution experiences frequent data breaches, its employees may eventually accept this situation as normal, leading to lower levels of concern for data security.
They may also stop taking preventive measures, thus increasing the likelihood of future breaches. Desensitization can negatively impact moral judgment by reducing the sense of urgency towards risky events and making it harder for individuals to discern right from wrong.
Relational Commitment
Repeated exposure to operational risk can also affect relational commitment, which refers to an individual's attachment to their job and employer. When organizations face frequent threats, employees may feel overwhelmed and develop negative attitudes towards their workplace. They may experience increased stress, anxiety, and burnout, leading to reduced job satisfaction and loyalty. In addition, repeated exposure to risk can make employees more likely to leave their jobs or seek alternative employment opportunities. This can create a vicious cycle where high turnover rates undermine organizational stability, further exacerbating the effects of risk on relational commitment.
Repeated exposure to operational risk can have significant implications for moral judgment and relational commitment. It is important for organizations to address these issues proactively by implementing risk management strategies that prioritize safety and security. By doing so, they can reduce the frequency of risks, maintain employee well-being, and promote sustainable business practices.
How does repeated exposure to operational risk shape moral judgment and relational commitment?
Research suggests that repeated exposure to operational risk can lead to a change in an individual's moral judgment and relational commitment. When individuals are repeatedly exposed to situations where they must make ethical decisions, their moral judgement may become more flexible and less rigid, allowing them to consider different perspectives and factors when making decisions. This can result in a shift from absolutist moral thinking to more situational or contextual moral reasoning.