{"ok":true,"canonical_url":"https://dealroom.so/glossary/operational-risk","api_url":"https://dealroom.so/api/public/glossary/operational-risk","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"operational-risk","term":"Operational risk","group":"Reading the business","definition":"The potential for losses due to inadequate or failed internal processes, people, systems, or external events. It's about how the business runs day-to-day.","what_it_means":"When evaluating a business, assess its operational risks. For example, is the business heavily reliant on a single supplier or a few key employees? Are its systems outdated? High operational risk can lead to instability post-acquisition and impact cash flow, making it harder to service debt. Identify these early in due diligence.","url":"https://dealroom.so/glossary/operational-risk","official_sources":[],"related":[{"slug":"due-diligence","term":"Due diligence","url":"https://dealroom.so/glossary/due-diligence"},{"slug":"key-personnel","term":"Key personnel","url":"https://dealroom.so/glossary/key-personnel"},{"slug":"business-plan","term":"Business plan","url":"https://dealroom.so/glossary/business-plan"},{"slug":"cash-flow","term":"Cash flow","url":"https://dealroom.so/glossary/cash-flow"}],"related_questions":[{"question":"What if the franchisor requires specific operational changes that impact the business's profitability?","url":"https://dealroom.so/sba-7a/questions/what-if-the-franchisor-requires-specific-operational-changes-that-impact-the-business-s-pr"},{"question":"Can an SBA 7(a) loan cover ongoing operational costs like rent or utilities?","url":"https://dealroom.so/sba-loans/basics/can-an-sba-7-a-loan-cover-ongoing-operational-costs-like-rent-or-utilities"},{"question":"Is working capital from an SBA loan available immediately at closing for operational expenses and payroll?","url":"https://dealroom.so/sba-7a/questions/is-working-capital-from-an-sba-loan-available-immediately-at-closing-for-operational-expen"},{"question":"If I am buying a business where I was previously an employee, does my operational experience count?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-a-business-where-i-was-previously-an-employee-does-my-operational-experienc"},{"question":"What if a proposed franchise agreement includes a clause restricting the borrower's operational control or management?","url":"https://dealroom.so/for-lenders/questions/what-if-a-proposed-franchise-agreement-includes-a-clause-restricting-the-borrower-s-operat"},{"question":"If the business leases its operational property, can an SBA 7(a) loan still finance the acquisition?","url":"https://dealroom.so/sba-7a/questions/if-the-business-leases-its-operational-property-can-an-sba-7-a-loan-still-finance-the-acqu"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Operational risk","url":"https://dealroom.so/glossary/operational-risk","source_type":"DealRoom Data"}}