Operational Risk Management Whitepaper
Learn how to use your leading indicators to achieve your business objectives.
Operational risk management (ORM) for most businesses today, is much broader than losses, insurance and claims. In fact, the goal of ORM is to manage any facet of risk that threatens a company’s ability to achieve its strategic objectives. The desired outcome of a fully integrated enterprise-level operational risk solution is to perfect business process execution and repeat those best practices across the enterprise. For example, banks have moved consumers to online banking and now process millions of electronic checks per day. They achieved this by perfecting the process of one electronic payment and then repeating it millions of times per day. Reducing the variability in process execution produces more predictable financial and operational results for the entire organization.
The scope of ORM ranges from financial elements that focus on prudent capital allocation, human resources in areas of resource allocation and safety, and asset management in areas of quality and availability. Almost every company can benefit from the implementation of an operational risk management initiative to help ensure that their strategic objectives are accomplished.
Key to the successful execution of an ORM strategy is continuous improvement, which lies in the organization’s ability to establish a common platform for mitigating risk exposures discovered from both reactive (incident-based) and proactive (assessment-based) processes. Integration of these typically disparate processes and systems provide leaders with information that raises the awareness of and improves responsiveness to resolving management system weaknesses. These weaknesses expose the company to operational risks, compliance issues, and other costly consequences.