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Operational Risk and Corporate Sustainability Relationship Using Case-Based Reasoning

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This research seeks to contribute to the literature by classifying the operational risks to which companies are exposed and that have an impact on the results of sustainability through taxonomy. This study begins with a systematic literature review that covers 103 documents to build the theoretical constructs and establish the taxonomy; from this, the relationship among the constructs is established through reasoning based on 100 business cases. The results show a relationship between operational risks and corporate sustainability in aspects that generate this link, such as causes and consequences. From this, it is concluded that operational risks could affect corporate sustainability given that, based on case-based reasoning, we found relationship patterns linked by the economic, social, and environmental consequences and temporary effects on companies. The major contribution of this work lies in the proposed classification of operational risks regarding corporate sustainability and the establishment of their relationship. The findings of this study allow the management to classify the operational risk related to sustainability to carry out comprehensive risk management in companies, looking at the effects that this generates in the long term. The main limitation of this research was that the results of the connections can change depending on the analyzed case. In addition, the CBR case base includes many sectors of the economy, which is why it provides heterogeneous results. It was identified that the relationship can change if a sectoral analysis is performed.
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Operational Risk and Corporate Sustainability Relationship Using Case-
Based Reasoning
*Mariana Bravo Sepúlveda1, Felipe Isaza Cuervo2, Jorge-Andrés Polanco2
1Faculty of Economic and Administrative Sciences, Universidad de Medellín, Antioquia, Colombia
2Universidad de Medellín, Antioquia, Colombia
Abstract. This research seeks to contribute to the literature by classifying the operational risks to which
companies are exposed and that have an impact on the results of sustainability through taxonomy. This study
begins with a systematic literature review that covers 103 documents to build the theoretical constructs and
establish the taxonomy; from this, the relationship among the constructs is established through reasoning based
on 100 business cases. The results show a relationship between operational risks and corporate sustainability
in aspects that generate this link, such as causes and consequences. From this, it is concluded that operational
risks could aect corporate sustainability given that, based on case-based reasoning, we found relationship
patterns linked by the economic, social, and environmental consequences and temporary eects on companies.
The major contribution of this work lies in the proposed classication of operational risks regarding corporate
sustainability and the establishment of their relationship. The ndings of this study allow the management to
classify the operational risk related to sustainability to carry out comprehensive risk management in companies,
looking at the eects that this generates in the long term. The main limitation of this research was that the results
of the connections can change depending on the analyzed case. In addition, the CBR case base includes many
sectors of the economy, which is why it provides heterogeneous results. It was identied that the relationship
can change if a sectoral analysis is performed.
Key words: corporate sustainability, operational risks, sustainability drivers, case-based reasoning (CBR),
taxonomy.
DOI: 10.2478/plua-2024-0018
© 2024 Mariana Bravo Sepúlveda et al. This is an open access article
licensed under the Creative Commons Attribution-NonCommercial-
NoDerivs License (http://creativecommons.org/licenses/by-nc-nd/3.0/).
* Corresponding Author’s email:
mariana_15_85@hotmail.com
Introduction
The literature has shown that corporate risk has
an impact on businesses (Jensen et al., 2012); it has
been studied by many authors as the materialization
risk inuencing companies’ results by means of the
benet–cost relationship (Fatemi & Luft, 2002),
either through superior performance (Cancellier &
Salum, 2011) that is reected by decreased exposure,
by a reduced impact, by legislative incentives, or
even by achieving the maximization of yields, in
the case of investment portfolio risks (caused by the
correct application of diversication theory). It can
also be studied from a point of view in which the
materialization of risks can lead companies to poor
performance, nes, sanctions, and even bankruptcy
(Ortiz-de-Mandojana et al., 2011). Despite the fact
that these studies show the importance of evaluating
the incidence of risk for the business, there is no
holistic vision from the point of view of corporate
sustainability.
Sustainability studies have included factors
related to dierent dimensions (economic, social, and
environmental) (Lozano, 2008), but it is important to
carry out a holistic analysis that leads to standardized
measurement processes allowing us to assess and
measure corporate sustainability levels (Montiel &
Delgado-Ceballos, 2014). Although diverse topics
have been addressed, such as corporate social
responsibility, the business relationship with the
environment, business performance, the participation
of stakeholders in sustainable development, and
strategic decisions, among others, it was identied
that in these studies, risk has not been widely
explored. This is, however, necessary, since risk
management can be used to identify and control
threats and opportunities implied in the transition of
Received: 15 April 2024 Revised: 19 May 2024 Accepted: 28 October 2024
RURAL SUSTAINABILITY RESEARCH
52(347), 2024
ISSN – 2256-0939
RURAL
SUSTAINABILITY
RESEARCH
JOURNAL OF LATVIA UNIVERSITY OF
LIFE SCIENCES AND TECHNOLOGIES
Volume 52(347), December, 2024 ISSN 2256-0939
Available online at https://sciendo.com/journal/PLUA
109RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
companies towards sustainability (Schulte & Knuts,
2022).
There are authors who link corporate sustainability
with risk (Shaq et al., 2017), since companies
are exposed to inherent risks in the development
of their activity (Kouloukoui et al., 2019), which
could prevent them from meeting the fundamental
sustainability pillars (Patel et al., 2020). It is known
that operational risk aects businesses, but there
is no holistic vision, such as the one proposed by
sustainability. This highlights the need to manage the
dierent risks to which a company can be exposed,
including operational risks.
This research paper aims at classifying and listing
the operational risks that have an impact on corporate
sustainability results. For this, the article presents a
systematic literature review of 103 documents. Once
the classication of the two theoretical constructs is
obtained, the relationship between them is established
through the reasoning methodology based on 100
business cases. Finally, this article contributes to
the literature by explaining the relationship between
corporate sustainability and business performance
(Goyal et al., 2013) from the drivers, guidelines, and
characteristics that govern sustainability (Lozano
& von Haartman, 2018); in this way, the originality
of this work lies in the proposed classication and
connection between operational risks and corporate
sustainability. To address the research, Section 2 of
this article explains the methodology used, followed
by Section 3, which presents the results; then, Section
4 provides the discussion. Finally, the conclusions are
presented in Section 5.
Materials and Methods
The research consists of a sequential methodology
of two qualitative techniques. The rst consists of a
systematic literature review through an inductive
exercise with a bibliometric phase and a content
analysis to constitute the taxonomy of risk and
sustainability. Subsequently, the empirical relationship
between risk and sustainability is established through
a case-based reasoning analysis. The development of
this study’s stages is explained below.
Taxonomy for the Identication and Theoretical
Classication of the Operational Risk Components
and Corporate Sustainability
The research project began with a systematic
literature review, through a bibliometric analysis and
subsequently a content analysis. It began with the
bibliometric analysis, taking samples from Scopus and
applying data export as the data collection technique
(title–abstract–keywords). After this, a content
analysis was carried out, selecting the documents
with the Prism method (Moher et al., 2009), and, with
these, information processing was carried out aiming
at explaining the following points to the reader:
- The holistic vision of corporate sustainability.
- The operational risk management.
From the data collected, information processing
was carried out. Based on this analysis, a classication
of corporate sustainability and operational risks was
made. Studies that described taxonomic representations
were also included; reviewing the existing records was
used as a data collection technique. Through inductive
reasoning, the following question was answered: How
can we classify the operational risks that are related to
sustainability aspects?
Taxonomies are structures that connect concepts
through typication, i.e., concept specialization
relationships. These structures are fundamental to
the modeling of conceptual domains and have a
central organizing role in areas such as knowledge
representation, ontology engineering, and object-
oriented modeling, as well as knowledge organization
in data science (Batista et al., 2022). Taxonomies and
structured representations of concepts have always
played an important role in various contexts. With these,
sorting can be developed given a set of domain-specic
concepts. This helps in analyzing and classifying
theoretically derived factors, as well as factors from
empirical research (Horne & Fichter, 2022).
For the development of taxonomies, there are
dierent techniques for progressive grouping based
on the similarity of objects; however, researchers have
found that there is little guidance on how to build high-
quality taxonomies, which is why there are authors
who adopt the existing methodologies, such as Onto-
Clean and the ontology-based conceptual modeling
language OntoUML. This is how some authors have
managed to present a guideline for the main good
practices to correctly build taxonomies (Batista et al.,
2022); this paper is based on this guideline.
In order to build its taxonomy approach, we
began this research by developing an understanding
of the dierent methodologies, analyzing the
recommendations of authors based on their experience,
taking future recommendations from these studies, and,
thus, proposing the taxonomy for the present work.
This research intends to classify corporate
sustainability and operational risks in order to
operationalize each of the variables and clearly
dene the approach to be used in the study. For this,
taxonomic representation examples used by other
authors have been considered; these include previous
studies on operational risks and corporate sustainability
including taxonomy as the analysis technique. These
have evidenced that there is not a standardized method
of representing the classications in these research
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
110 RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
works and that, on the contrary, there is a diversity
of presentations displayed by other authors. They
have carried out their classication processes using
tables, diagrams, clusters, graphs, process maps,
clustering algorithms, neural networks, association
rule learning, and trees/hierarchies of classes and
subclasses, among others. On the other hand, this
paper presents its taxonomy based on the creation
of trees and the hierarchy of classes and subclasses
as a sorting methodology (Zhu et al., 2020). It thus
shows the results of the classication under a data
qualitative approach; rst, it presents the sustainability
classication and then the risk classication.
Structuring the Correlation between Operational
Risks and Sustainability Aspects through the Case-
Based Reasoning Methodology
The theoretical framework and the taxonomy make
it clear that the classication must incorporate both
theoretical constructs. For this, the paper establishes
the relationships between the classication of corporate
sustainability and the classication of operational
risks through the development of reasoning based on
cases. We used a base of 100 cases, found in Appendix
A, where the qualitative information was processed
using Web Scraping as a data collection technique. In
order to create the case base, interpretative synthesis
was used as a data collection technique. Then, the data
analysis and ndings were obtained.
To establish the relationship between operational
risks and corporate sustainability, the literature
review is taken as theoretical evidence. The explicit
connection between these two theoretical constructs
is established through the relationship between
taxonomies. To establish the connection, the case-
based reasoning (CBR) analysis methodology
is used. An analysis of experiences (a fact that
occurred in the past) and reusing the experiences
of materializing operational risks are used to obtain
empirical evidence on the factors that can be taken
as a reference. Accordingly, we proceed to collect the
information and create the case database. For this,
other authors who have already established this type
of relationship with this methodology are taken as
a reference, linking dierent theoretical constructs
through historical connections.
To list the 100 cases, a detailed description of the
selection criteria and the procedure for their analysis
is provided below:
(I) Identication of operational risk cases: the
search was performed for companies that
have historically had an operational risk
materialized in the company.
(II) Description of the operational risk event:
this shows the event that occurred in the
company that led to the materialization of the
operational risk.
(III) Year of occurrence: this indicates the year in
which the materialization of the operational
risk occurred.
(IV) Type of operational risk: according to the
occurrence, the classication of the operational
risk is performed.
(V) Consequences: inductive reasoning is used to
indicate the consequences presenting risks on
corporate sustainability.
Once the case database is documented, the empirical
link between operational risk and sustainability is
established. For this, the variables dened in the
taxonomy are assigned to each of the cases depending
on the consequences of each risk; thus, an explanation
of risk cases and their consequences is obtained.
Finally, the theoretical model is contrasted with
empirical validation to explain the similarities and
dierences between them; then, the conclusions of the
analysis are presented.
Results
In order to build the taxonomy approach, this research
conducted a bibliometric analysis that was raised with
the Scopus database. The information was collected by
applying the “Citation Pearl Growing” method (Schlosser
et al., 2006), using, in the search equation, the main themes
“Sustainable*” and “Risk”. The main studies analyzed
through the co-authorship networks are included; with
these, an analysis of the correlations and co-occurrences
that are presented in the literature was performed using
the Scopus database. These were ltered and processed in
the VOSviewer tool, as presented in Figure 1.
The resulting network presents the knowledge
map of corporate sustainability and business risks,
where the relationship of co-occurrences is found; it
reveals the existence of seven clusters where the most
relevant keywords are identied in the bibliographic
records. From this, the most distinguished cluster is
the one that includes sustainable development issues,
followed by the risk management cluster and then
sustainability. In addition, there are other clusters that
refer to economic development issues, risk perception,
environmental impacts, and strategic decisions.
As shown in Figure 2, all the clusters generate a
relationship among them and allow us to approach
the topics that have been studied in the literature, with
the most relevant concepts in this eld. Table 1 below
shows the terms with the most frequent appearance in
the VOSviewer® tool.
After identifying the existing knowledge map
between corporate sustainability and operational risk,
the analysis of the keywords presenting the greatest co-
occurrences and the selection of documents for content
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
111RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
analysis is performed. For this, the Prism method
is implemented with the topics of interest. Figure 2
presents the process for ltering the documents.
From the ltered documents, the content analysis
was carried out. It shows the results of the sections
proposed by the methodology. The documental
analysis ndings are shown below:
Sustainability has been widely dened by dierent
authors; however, few of them have committed to
identifying the variables or sustainability factors that
are related to the business system. The classication
of corporate sustainability begins by understanding
the work proposed by authors who explicitly show the
relationship of the corporate system with sustainability,
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
Figure 1. Knowledge map.
Source: Own elaboration in VOSviewer.
Table 1
Most relevant co-occurrences
Cluster 1 Cluster 2 Cluster 3 Cluster 4 Cluster 5 Cluster 6 Cluster 7
Sustainability Economics Sustainable
Development Costs Environmental
Impact
Risk
Management
Decision
Making
Climate
Change
Developing
Countries Risk Assessment Energy Policy Environmental
Protection
Project
Management
Economic And
Social Eects
Risk Financial
Management Innovation Financial
Sustainability
Environmental
Management Public Policy Planning
Sustainable
Finance Risk Factor Information
Management Risk Perception Health Risks Risk Analysis Economic
Analysis
Financial
System Health Industry Cost/Benet
Analysis
International
Trade
Industrial
Economics
Laws And
Legislation
Source: Own elaboration.
112 RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
where the following classications are focused on
the results of their research. Lozano (Lozano & von
Haartman, 2018) proposes drivers of sustainability
that explain the economic, social, and environmental
results from internal, external, and connection drivers.
These are grouped by clusters according to corporate
interests; they include in the internal drivers, economic
factors, culture, and leadership. Within the external
drivers, there are regulatory and political factors,
customers, collaboration, awareness, and the pressure
from interested parties. Within the connection drivers,
there are the connection markets, crises, reports, and
reputation.
Likewise, authors such as Lüdeke-Freund (Lüdeke-
Freund et al., 2018), classify sustainability from a
taxonomy proposing a “Triangular Analysis”, which
is composed of the connection of the three domains
of results (economic, social, and environmental),
where groups of employers are connected with the
means of creating value in a company. Among these,
there are the price and income patterns, nancing,
eco-design, closing the cycle, the supply chain,
donations, access provision, the social mission,
service and performance, cooperative activism, and
the community platform. Each of these factors has
dierent associated characteristics that form groups
and patterns for corporate value creation. Along with
this research, (Alonso-Martinez et al., 2021) show a
taxonomy of sustainable business models describing
archetypes divided as follows:
(I) Environmental (to maximize material and
energy eciency; to transform waste into
valuable inputs; to substitute with renewables
and natural processes);
(II) Social (providing functionality through pay-
as-you-go instead of product ownership,
adopting a managing role, fostering self-
suciency);
(III) Economic (to reuse resources for society/
environment; to develop sustainable
expansion solutions; creation of inclusive
value).
Alternatively, Horne and Fichter (Horne & Fichter,
2022) establish a taxonomy that is divided into three
levels, a micro level, a medium level, and a macro
level, where there are internal variables (the natural
environment, policies and regulations, the sociocultural
environment, the business ecosystem, technology,
industry, and the market) and external variables (the
work team, the vision and strategy, company processes,
resources, products and services, and positioning).
Other authors refer to a taxonomy only composed of
social dimensions, or taxonomies of environmental
dimensions, and, nally, other authors only classify
sustainability variables around economic performance.
According to the previous authors, scientic
research proposes sustainability taxonomies where
economic, social, and environmental components are
discussed (Seay, 2015); later, the temporal factor is
introduced in the analyses (Lozano, 2015), In addition,
Figure 2. Implementation of the Prism method for document selection,
where n is the number of documents.
Source: Own elaboration.
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
113RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
it is found that in the sustainability–corporate system
relationship, there is a great diversity of factors in
these previous studies, where strong relationships
cannot be identied. They are also limited; thus, there
is a search for indicators associated with drivers in
nancial databases, sustainability standards, reports,
and sustainability guides worldwide to obtain the
indicators associated with these. Dierent sources,
such as the GRI, the Dow Jones Sustainability Index,
and Bloomberg, were used.
In accordance with the information obtained
from the theoretical and empirical evidence, the
classication of sustainability is carried out according
to the grouping methodology. This classication takes,
as its rst level of grouping, sustainability drivers
(economic, social, environmental, temporal); they
present the theoretical standards that were evidenced
in the literature review. Next, there is Level 2, which
takes as a reference the sustainability indicators used
in Bloomberg’s nancial reports (Bloomberg L.P
®, 2023), and, nally, Level 3 is based on the Dow
Jones Sustainability™ World Index (The Dow Jones
Sustainability World Index Guide, 2012) and the GRI
(Global Reporting Initiative, 2023) standards; they
were classied by assigning them a mnemonic item
for ease of location. Below, Figure 3 presents the
classication and each of its components.
Next, we present the mnemonics that were
assigned to the variables for the classication of
corporate sustainability.
Classication of environmental components: E1
Energy consumption, E2 Operational eco-eciency,
E3 Electricity generation, E4 Transmission and
distribution. A1 Water and euents, A2 Transmission
and distribution, A3 Euents and waste, A4 Risk
related to water.GD1 Emissions, GD2 Environmental
compliance. M1 Materials, M2 Transmission and
distribution, M3 Emissions. EI1 Emissions, EI2
Environmental compliance. GE1 Climate change
governance, GE2 Biodiversity, GE3 Climate strategy,
GE4 Operational eco-eciency. PA1 Environmental
compliance, PA2 Environmental footprint, PA3
Biodiversity, PA4 Environmental evaluation of
suppliers, PA5 Environmental reports.
Classication of social components: EM1
Employment, EM2 Attraction and retention of talent,
EM3 Health and safety at work. DS1 Employee–
employer relationships, DS2 Diversity and equal
opportunities. CAP1 Training and education, CAP2
Human capital development. CC1 Non-discrimination,
Figure 3. This gure shows the taxonomy of corporate sustainability according to the interpretation obtained
from the literature review and the information taken from the sustainability and nancial information bases.
Source: Own elaboration.
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
114 RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
CC2 Social assessment of providers, CC3, Local
communities, CC4 Contribution to health outcomes.
IS1 Freedom of association and collective negotiating,
IS2 Child labor, IS3 Forced or compulsory labor. CS1
Social assessment of providers, CS2 Socioeconomic
compliance, CS3 Supplier standards. PS1 Rights of
indigenous peoples, PS2 Public policy, PS3 Indicators
of labor practices, PS4 Social reports.
Classication of economic components: R1
Economic performance, R2 Indirect economic
impacts. L1 Customer relationship management,
L2 Risk and crisis management. END1 Business
opportunities and nancial services/products. MDO1
Presence in the market.
Once the corporate sustainability classication is
obtained, the operational risk is studied, where us found
that research evidences that there is a disengagement
between risks and corporate sustainability (Hawkins
& Weber, 2015); it is argued that sustainability should
be seen as a separate and isolated issue involving
the business strategy, legal environment, economics,
accounting, corporate nance, marketing, and
international business (Stubbs & Cocklin, 2008).
The foregoing is also explained by studies that
suggest that a “negative aspects” report can endanger
corporate legitimacy if the stakeholders perceive
that the company is not aligned with social norms
and values. In addition, many scholars question the
eectiveness of sustainability reports; they argue
that reporting can mislead sustainability decision-
makers, or even can mask unsustainable practices.
Despite the fact that these studies highlight the
disconnection between business management and
corporate sustainability, this paper’s challenge was
to establish the classication and connection of
operational risks with corporate sustainability. This
relationship has been identied through dierent
authors; they state that risk management supports
decision-making aimed at reducing the adverse eects
of risk factors. Alternatively, this research adopts
a dierent perspective on operational risks. This
paper intends to raise awareness among the readers
about the eects that the materialization of risks can
produce on companies. As a result, these eects might
act against or in favor of sustainability. This research
work’s vision is in line with studies arming that risk
management helps decision-making aimed at reducing
the adverse eects of risk factors.
To better understand the risk management process,
it must be noticed that it includes identication,
measurement, control, and monitoring activities; it is
important to quantify the total risk exposure level faced
by companies. The former leads to the identication
of potential losses or the generation of added value.
This demonstrates that the materialization of
risks is linked to administrative planning since it
determines how objectives can be modied in the
short or long term; risk management is a relevant topic
in the business world, necessary to estimate the value
and level of risk to which companies are exposed; a
discipline that helps to establish decision strategies
against risks results from this.
Although there are guidelines that provide
instructions for risk management and they show
good practices (such as those presented in Table 2),
the risk management performance evaluation process
is complex and dicult. Most of these diculties
can be attributed to the fact that the impact of losses
Table 2
Risk management guidelines
Guideline Description Reference
As / NZ 4360
(Australian/New Zealand
Standard)
This provides a general guideline for risk
management, which can be widely used in dierent
sectors. (Chen, 2018)
ISO (International
Organization for
Standardization)
This is an international standard on risk management
practices, also called “Risk Management—Principles
and Guidelines”.
(Gjerdrum & Peter,
2011)
COSO (Committee of
Sponsoring Organizations
This helps organizations to design and implement
internal control based on the shifting business and
operating environments.
(Power, 2005)
Basilea This standard describes the framework for risk-based
capital requirements.
(Hernández Barros,
2015)
Solvencia This establishes the minimum capital requirements to
cover the risk in companies. (Gatzert et al., 2012)
Source: Own elaboration.
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
115RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
prevented or reduced by risk management practices
cannot be easily measured.
In these guidelines, it is evident that one of the
branches in studying corporate risk is operational risk.
It is dened as the risk of loss resulting from internal
processes, people, and inadequate, failed systems or
external events, which must be identied, measured,
controlled, and monitored. This is due to the fact that
risk is inherent to almost every activity, both daily and
industrial; so, the denition, in this context, can be
understood as the possibility of an operation-derived
event occurring that aects corporate objectives.
For the development of the taxonomy, rst, it is
required to understand the classication of business
risks proposed by Mejia (Mejía Quijano, 2013), who
explains that companies are exposed to environmental
risks and to those coming from the company itself;
the latter are classied into dierent classes, such
as non-systematic risks, reputational risks, pure
risks, speculative risks, strategic risks, operational
risks, nancial risks, legal risks, technological risks,
labor risks, and physical risks. Then, the operational
risks are classied into the “risks generated by the
company”. Therefore, this research takes this general
classication to establish their importance within a
company.
Once the operational risks in the corporate system
have been identied, an analysis of the classication
of operational risks is carried out. The literature review
had identied that there are dierent international
standards providing this input. In this research work,
the classication proposed by the Basel Committee
(Basilea, 2004) has been used as a reference. It is
divided into 3 levels, and, for this research, Level 1
is taken. This level classies the operational risk as
internal fraud, external fraud, labor relations and job
security, clients, products and business practices,
damage to physical assets, technological failure, and
the execution and administration of processes.
In accordance with the current categorization,
interpretation–description is used as a data analysis
technique so that the interpretation and connection
of business risks with operational risks is carried out.
This is established through the tree or hierarchy of
classes and subclasses methodology (Zhu et al., 2020).
Figure 4 presents the classication of operational risks
used in this research.
Once we have obtained the taxonomy of
corporate sustainability and the operational risks, the
relationship between them is established. The next
section explains the results of the relationship through
empirical analysis to test the relationship between the
theoretical constructs.
Research that covers the existing body of
knowledge on these issues found that sustainability
becomes relevant as an alternative to traditional
short-term and for-prot approaches to company
management, since it holistically balances the
economic, environmental, and social problems in the
current generation and for future generations. This
supports the fact that companies are exposed to risks,
inherent to the development of their activity; these
could lead to a failure to achieve the fundamental
pillars to becoming sustainable (Patel et al., 2020).
It also highlights the need to manage the operational
risks to which a company can be exposed because,
during the development of their activities, companies
can generate operational risks that are mainly based on
business action. This can aect business sustainability,
which is why authors point out that companies, in
their strategies, need to integrate sustainability and
risk management so as to reduce possible losses and
impacts and obtain opportunities derived from the
sustainability agenda.
Figure 4. This gure shows the taxonomy of operational risks according to the interpretation obtained from
the literature review and the information taken from the Basel Committee.
Source: Own elaboration based on Basilea, 2004 and Mejía Quijano, 2013.
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
116 RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
Based on the taxonomy proposed in the previous
section, empirical validation is performed through
an analysis based on the CBR methodology. For this
research work, 100 cases of the materialization of
operational risks were used. Data from the cases were
collected via the web scraping methodology. The search
for cases with “close-to-materialization operational
risks” was conducted using this methodology (its search
variable was the materialization of operational risks).
Once the data from the cases were collected, an
interpretative synthesis was carried out. With this, the
empirical connections among the materialization of
the risks, their causes, and their consequences were
established.
The cases are analyzed from the three components
suggested by integrated risk management (causes, risks,
and consequences). The results are shown in Figure 5,
where, in terms of risk, it is evident that the risk with
the most materialization is internal fraud, followed
by clients, products, and corporate practices; this is
followed by xed assets damage, process execution and
administration, external fraud, technological failures,
and nally labor relations and labor security. The
numbers shown in the graph are the number of cases
corresponding to the classication of each risk.
In addition, an analysis of the cases by their
consequences shows that the most relevant impact is
the economic impact, followed by the social impact,
the environmental impact, and nally the impact of
permanence over time (Figure 6). The numbers shown
in the graph are the number of cases corresponding to
the classication of each impact.
Based on the relationship presented between the
case database and the causes and consequences of
operational risks, this study proceeded to evaluate
the eects of the operational risks on corporate
Figure 5. This gure hierarchical ranking the risks according to the number of matrix events.
Source: Own elaboration.
Figure 6. This gure ranks of the impacts analyzed in the cases.
Source: Own elaboration.
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
117RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
sustainability factors; we found an explicit connection
between these two theoretical constructs, where the
connection shown in Figure 7 was established.
The relationships presented by the analyzed
cases illustrate that there is a link between the
operational risks and corporate sustainability; the
connections can be established through causes, risks,
and consequences. The Table 3 presents a general
summary of the relationships found.
Based on the above results, a contrast is established
with the theoretical relationships presented by other
authors, and the similarities and dierences between
the theoretical and the empirical model, which are
presented in the discussion section. Below, the
discussion is presented based on the literature review
and the case-based approach developed in this research.
Discussion
The literature review shows that, in the relationship
sustainability corporate system (Lozano & von
Haartman, 2018), there is a great diversity of factors
(Horne & Fichter, 2022); among these, it was not possible
to identify strong relationships to classify sustainability.
Moreover, studies that have already examined these
factors are limited (Lau et al., 2018). This is why
reports were explored to approach the variables used
in the classication (Batista et al., 2022). Alternatively,
operational risk is well dened and there are guidelines
that provide information on risk classication depending
on the type of risk to be analyzed.
The seminal documents explaining the origin of
these issues (through the elements of the business
system, such as operations and processes, management
Figure 7. This gure shows the relationship between the classication of operational risks and corporate
sustainability based on the analysis and interpretation carried out using the case-based reasoning methodology.
Source: Own elaboration.
Table 3
Summary of the relationships between operational risks and corporate sustainability.
Connections Environmental Social Economical Temporal
Internal fraud
External fraud
Labor relations and labor security
Clients, products, and corporate practices
Fixed asset damage
Technological failures
Process execution and administration
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
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Jorge-Andrés Polanco
118 RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
and strategy, organizational systems, procurement
and marketing, and evaluation and communication)
allow (Lozano, 2012) us to approach the connection,
since the business activity per se entails operational
risks. These are inherent to the business operations,
the risk theory classies it according to the cause
or the consequence that it can generate (Inés et al.,
2018), and, according to this classication, the link
between the operational risks and sustainability can
be created.
Based on this theoretical baseline, this article
developed the linkage of dierent theories relating
each of the elements of the corporate system with risks
and subsequently linking corporate sustainability. As a
result of this, the theoretical model shown in Figure 3
was presented, where the theoretical link is established
from the theories and risk guidelines; this was later
empirically validated with case-based reasoning.
The empirical validation made it possible to
conrm the links established from the literature
review to congure the taxonomy proposed in this
research. Thus, the originality of this article lies in the
establishment of the classication and connection of
operational risk management and sustainability. When
contrasting the theoretical ndings with the empirical
validation, it is found that, in both cases, there are
explicit connections between risks and sustainability
through the causes and consequences of operational
risks. From this contrast, the following similarities
and dierences between the theoretical model and the
empirical model are evident.
About similarities, both models show the
existence of a relationship between the operational
risks and corporate sustainability through internal
and external causes. Also, both models show the
existence of a relationship between the operational
risks and corporate sustainability through the
consequences that are linked to the sustainability
guidelines with environmental, social, economic, and
temporal impacts. And, both models can adopt the
classications suggested by the literature review. As
far as dierences are concerned, it can be concluded
that the empirical model shows that the materialization
of operational risks has an impact on some aspects
of sustainability, but not necessarily on all of them,
while, in the theoretical model, this cannot accurately
be validated. It was also possible to conclude that
the empirical model shows that both the internal and
external causes do not generate all types of risks,
while, in the theoretical model, this relationship cannot
be distinguished. And nally, the theoretical model
provides more information on risk classication since
it is based on taxonomic representations; the empirical
model does not allow for depth on other classication
levels. Based on the contrast between the theoretical
model and the empirical model, the conclusions of the
research are presented below.
Conclusions
In the development of this research, new means
of approaching operational risks are presented. When
relating them to sustainability, a framework emerges,
and it shows a relationship with operational risk
management considering the externality problems
that traditionally aect companies. It also shows
eectiveness in the interpretation of operational
risks based on corporate sustainability; this answers
the research question, namely “how can we classify
the operational risks that are related to sustainability
aspects?” It was identied that connections between
the causes, risks, and consequences can be established,
and based on these ndings, it is concluded that
operational risks could aect corporate sustainability
based on the connections presented in this research.
Through empirical validation, it is evident that the
eects are specic to each risk and that these should
not be generalized. The main limitation of this research
was that the results of the connections can change
depending on the analyzed case. In addition, the CBR
case base includes many sectors of the economy,
which is why it provides heterogeneous results. It was
identied that the relationship can change if a sectoral
analysis is performed.
Future research should consider that, in the
risk management process, once the identication
process is completed, the risks must be measured to
quantify the degree of operational risk in companies.
The measurement of operational risk evaluates the
probability of later experiencing nancial losses in
an organization; they are managed through detection/
supervision, mitigation/management, or optimization
techniques. Through these, they are nally monitored
and controlled. This is why it is important to further
advance the process risk modeling, monitoring, and
control to attend to the risk management process as
exposed by theory and nally to characterize the
sample in order to generate sectoral studies that show
more compelling patterns.
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Appendix A
Operational Risk and Corporate Sustainability Relationship Using Case-Based Reasoning
Table A1
Base of 100 research cases
Case
Company Case Year Causes Operative risk
Level 1
Consequences
Level 1
1British
Petroleum
Explosion at the Gulf of
Mexico 2010 Internal Damage to physical
assets Economic Social Environ-
mental
2 Enron Irregular practices 2001 Internal Internal fraud Economic Social
Perma-
nence in
time
3 Mattel Lead in toys 2006 Internal Clients, products and
corporate practices Economic Social Environ-
mental
4Barings
Bank
Fraud with nancial
derivatives 1995 Internal Internal fraud Economic Social
Perma-
nence in
time
5 Toyota Brake errors 2010 Internal Clients, products and
corporate practices Economic Social
6Samsung Samsung Galaxy Note 7
explosion 2016 Internal Clients, products and
corporate practices Economic Social Environ-
mental
7 Parmalat Fraud and falsication of
nancial information 2003 Internal Internal fraud Economic Social
8Societe
Generale
Fraud with nancial
derivatives 2008 Internal Internal fraud Economic Social
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121RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
9Vodafone
Deutschland Data theft 2013 External External fraud Economic
10 Volkswagen System to deceive pollu-
tion emission controls 2015 Internal Clients, products and
corporate practices Economic Social Environ-
mental
11 Xerox Hidden accounting
maneuvers 2000 Internal Internal fraud Economic
12
Waste
Manage-
ment
Accounting manipulation 1998 Internal Internal fraud Economic
13 Kmart Accounting manipulation 2001 Internal Internal fraud Economic
14 Tyco Fraudulent maneuvers 2001 Internal Internal fraud Economic
15 Olympus Accounting manipulation 2014 Internal Internal fraud Economic
16 Lehman
Brothers
Accounting manipulation,
derivatives, greed, exces-
sive leverage
2008 Internal Internal fraud Economic Social
Perma-
nence in
time
17
Mado
Investment
Securities
(BMIS)
Scam—pyramid scheme 2008 Internal Internal fraud Economic Social
Perma-
nence in
time
18 Daiwa Bank Irregular operations in the
bond market 1995 Internal Internal fraud Economic
19 Sumitomo
Bank
Trading copper contracts
with unrecorded losses in
three years
1996 Internal Internal fraud Economic
20 Allied Irish
Bank
Falsication of bank
statements and documents 2002 Internal Internal fraud Economic Social
21
National
Westminster
(Natwest)
Incorrect valuation of
option contracts and
swaptions
1997 Internal Internal fraud Economic Social
Perma-
nence in
time
22 WorldCom
Inc
Accounting frauds and
appropriations of funds 2002 Internal Internal fraud Economic Social
Perma-
nence in
time
23
Allianz,
Lloyd´s,
AXA,
Berkshire
Hathaway,
others
Terrorist attacks against
the Twin Towers 2001 External Damage to physical
assets Economic Social Environ-
mental
24 Windsor
Building
Windsor building re
caused loss of prots for
businesses
2005 Internal Damage to physical
assets Economic Social Environ-
mental
25 Imar Bank False nancial statements 2003 Internal Internal fraud Economic Social
Perma-
nence in
time
26 SolarWinds
Hidden malicious code
that sent software updates
to its 18,000 customers
2021 External External fraud Economic Social
27 Colonial
Pipeline
Cyber-attacks against
vital U.S. infrastructure 2021 External External fraud Economic Social
28 Garmin
Global downtime of
company services due to
ransomware cyber attack
2020 External External fraud Economic Social
29 Capcom
Ransomware attack that
stole sensitive corporate
documents, as well as
condential customer and
employee information
2020 External External fraud Economic Social
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30 Canon
Ransomware attack of 10
Tbytes of data and stolen
databases
2020 External External fraud Economic Social
31 Twitter
An employee received
money for allowing
attackers to use certain
management tools that
were only accessible to
company personnel
2020 Internal Internal fraud Economic Social
32 Microsoft
Windows XP source code
and Windows Server
2003 source code leaked
2020 Internal Process execution and
administration Economic
33 Marriott
Hotels
Security breaches with
theft of personal and
nancial data of 500 mil-
lion customers
2018 External External fraud Economic Social
34 AT&T Software update bug
crashed network 1990 Internal Technological failures Economic Social
35
Euro-
pean Space
Agency
A computer crash while
trying to convert data
from 64-bit to 16-bit for-
mat led to the explosion
of the Ariane 5 rocket
1996 Internal Technological failures Economic Environ-
mental
36 Airbus
Airbus A380 delayed due
to software incompatibil-
ity issues
2006 Internal Technological failures Economic
37
Dell, Matsu-
shita, Sony,
Lenovo,
Acer
Laptop explosion was a
battery issue 2006 Internal Technological failures Economic Social Environ-
mental
38 Samsung Samsung’s Galaxy Fold
breaks when bent 2019 Internal Clients, products and
corporate practices Economic Social
39
CDMX
Subway
(Mexico)
Collapse of CDMX
subway line 12 2021 Internal Damage to physical
assets Economic Social
40 Sriwijaya
Air
Sriwijaya Airplane
crashes into Indonesian
sea, leaving 62 dead, due
to throttle lever failures
2021 Internal Damage to physical
assets Economic Social Environ-
mental
41 Starlink
Geothermal storm wiped
out 80% of the satellites
launched
2022 External Damage to physical
assets Economic Environ-
mental
42 Ever Given
Mega container ship
Ever Given stuck in Suez
Canal
2021 Internal Damage to physical
assets Economic Social Environ-
mental
43 Baninter Defaulted as a result of
embezzlement 2003 Internal Internal fraud Economic Social
Perma-
nence in
time
44 Petrobras Embezzlement scandal External External fraud Economic Social
45 Demae-can
Platform failures, a
system error generated
refunds or cancellation of
payments
2018 Internal Technological failures Economic
46 United
Airlines
Disembarking of pas-
sengers due to ticket
overbooking
2017 Internal Clients, products and
corporate practices Economic Social
47 VanCamp’s
Alert on a batch of tuna
that had a higher mercury
level than established in
the regulations
2017 Internal Clients, products and
corporate practices Economic Social
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48
Hennes and
Mauritz
(H&M)
Controversy due to adver-
tising that had a message
that was considered racist
around the world
2018 Internal Clients, products and
corporate practices Economic Social
49 Telstra Massive service outage
throughout the country 2015 Internal Technological failures Economic Social
50 Capital One
Hacker gained access
to 100 million customer
accounts and bank credit
card applications
2019 External External fraud Economic Social
51 BMW
52 res broke out
in South Korea in
automobiles of German
automaker BMW
2018 Internal Clients, products and
corporate practices Economic Social Environ-
mental
52 Facebook
Facebook was implicated
in a 267 million data
breach
2018 External External fraud Economic Social
53 Rappi
A protest was made due
to changes in the rappi
application
2020 Internal Labor relations and
labor security Economic Social
54 Luckin
Coe
Luckin Coee used af-
liated entities to place
huge online orders of
coee that were never
delivered to inate its
sales volumes
2020 Internal Internal fraud Economic Social
Perma-
nence in
time
55 Clorox
Withdrawal from the
market of all Poett brand
antibacterial liquid
cleaners
2020 Internal Clients, products and
corporate practices Economic Social Environ-
mental
56 Postobón
Sanction for inadequate
information and mislead-
ing advertising of one of
its products
2020 Internal Clients, products and
corporate practices Economic Social
57 Wakashio
It ran aground on a coral
reef o Mauritius Island
with more than 4,000 tons
of oil
2020 Internal Damage to physical
assets Economic Social Environ-
mental
58 Famsa Bank
Granted loans to related
persons of the group in
excess of regulatory
limits
2020 Internal Process execution and
administration Economic Social
59 Wirecard
Increased accounts with
ctitious funds through
irregular operations in the
Philippines
2020 Internal Internal fraud Economic Social
Perma-
nence in
time
60 Ecopetrol Attacks on the Caño
Limón pipeline. 2020 External Damage to physical
assets Economic Social Environ-
mental
61 ZOOM Inc
“Zoombombing” cyber
attacks, inltrating and
sabotaging active vide-
oconferences
2020 External External fraud Economic Social
67 Odebrecht Bribes 2016 Internal Internal fraud Economic Social
Perma-
nence in
time
63 Interbolsa Bankruptcy of the
company 2012 Internal Internal fraud Economic Social
Perma-
nence in
time
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
124 RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
64 Arianespace
A spacecraft that was
sent to be placed into
orbit took an unexpected
course, veering o course
and subsequently failing
the mission
2020 Internal Process execution and
administration Economic Environ-
mental
65
Satyam
Computer
Services
Financial reporting fraud 2009 Internal Internal fraud Economic Social
66 Petrobras Embezzlement scandal 2014 Internal Internal fraud Economic Social
67 Goldman
Sachs Fraud 2009 Internal Internal fraud Economic Social
68 BCCI
Fraudulent activities of
BCCI at the international
scale
1991 Internal Internal fraud Economic Social
Perma-
nence in
time
69 Ericsson International business
corruption 2019 Internal Process execution and
administration Economic Social
70 Siemens Corruption 2008 Internal Internal fraud Economic Social
71 HealthSouth Accounting scandal 2003 Internal Internal fraud Economic Social
72 WorldCom Fraudulent maneuvers 1999 Internal Internal fraud Economic Social
Perma-
nence in
time
73 Global
Crossings
Bankruptcy of the
company 2002 Internal Internal fraud Economic Social
Perma-
nence in
time
74 Bernie
Mado Stock fraud 2008 Internal Internal fraud Economic Social
Perma-
nence in
time
75 Diamond
Foods Financial reporting fraud 2012 Internal Internal fraud Economic Social
Perma-
nence in
time
76
Garment
industry
Mexico,
Sri Lanka,
China, and
Cambodia
Workplace harassment 2020 Internal Labor relations and
labor security Economic Social
77 U.S. work-
ers
Discrimination of em-
ployees based on “race,
color, religion, sex”
2018 Internal Labor relations and
labor security Economic Social
78
British
Retail Con-
sortium
Workers suered from
threats and verbal abuse 1995 Internal Labor relations and
labor security Economic Social
79 Mining
sector Women’s exclusion 2020 Internal Labor relations and
labor security Economic Social
80 Energy
sector Accidents and deaths 2015 Internal Labor relations and
labor security Economic Social
81
Community
Innovation
Survey
Corporate failure—in-
novation 2020 Internal Technological failures Economic Social
Perma-
nence in
time
82
ACI, IATA,
IACA,
Airbus, and
Boeing
Vulnerability and critical-
ity for terrorist attacks 2011 External Damage to physical
assets Economic Social Environ-
mental
83 IT Compa-
nies
Accidental destruction of
data and backups 2018 Internal Technological failures Economic Social
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
125RURAL SUSTAINABILITY RESEARCH 2024, VOLUME 52 (347)
84 Vladimir
Ilyich Lenin
Nuclear power plant
accident 1986 Internal Process execution and
administration Economic Social Environ-
mental
Perma-
nence in
time
85 Upper Big
Branch
Underground explosion—
coal dust explosion 2010 Internal Process execution and
administration Economic Social Environ-
mental
86 Imperial
Sugar Explosion 2008 Internal Process execution and
administration Economic Social Environ-
mental
87 Port Went-
worth Industrial dust explosion 2010 Internal Process execution and
administration Economic Social Environ-
mental
88 Imperial
Foods Industrial re 1991 Internal Process execution and
administration Economic Social Environ-
mental
89 Piper Alpha American oil rig explodes
and kills 167 men 1988 Internal Process execution and
administration Economic Social Environ-
mental
90 L’Ambiance
Plaza
Collapses due to struc-
tural deciencies 1987 Internal Process execution and
administration Economic Social Environ-
mental
91
Buf-
falo Creek-
Pittston
Coal Com-
pany’s
Dam collapse 1972 Internal Process execution and
administration Economic Social Environ-
mental
92
Triangle
Shirtwaist
Factory
Fire trapped more than
500 workers 1911 Internal Damage to physical
assets Economic Social Environ-
mental
93 Pemberton
Mill. Industrial accident 1860 Internal Damage to physical
assets Economic Social Environ-
mental
Perma-
nence in
time
94 Washburn
Mill
Flour dust causing an
explosion 1878 Internal Damage to physical
assets Economic Social Environ-
mental
Perma-
nence in
time
95 Fraterville
Coal Mine Coal mine explosion 1902 Internal Damage to physical
assets Economic Social Environ-
mental
Perma-
nence in
time
96 Nestlé Cultural adaptation 2018 Internal Clients, products and
corporate practices Economic Social
97
Air France,
British
Airways,
Iberia
Price decision 2021 Internal Clients, products and
corporate practices Economic Social
98 Burger King Controversial ad cam-
paign 2011 Internal Clients, products and
corporate practices Economic Social
99 Royal
Ahold
Failed strategy, an ac-
counting scandal, the
ring of professional
management, and litiga-
tion lings
2003 Internal Internal fraud Economic Social
Perma-
nence in
time
100 Pepsi Reputational damage due
to advertising campaigns 2017 Internal Clients, products and
corporate practices Economic Social
Source: Own elaboration.
Operational Risk and Corporate Sustainability
Relationship Using Case-Based Reasoning
Mariana Bravo Sepúlveda, Felipe Isaza Cuervo,
Jorge-Andrés Polanco
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