Alongside the growth of Enterprise Risk Management, Operational Risk Management is a disciple which has emerged and raised up the management agenda as a result of operational and regulatory pressure. Basel 2 brought operational risk management to the forefront of the risk management agenda prior to the credit crunch. In the wake of the crisis, there is a renewed emphasis in operational risk management as organisations look to reduce operational losses and establish a 'no surprises' environment.
Operational Risk is all about the risk related to processes, systems and people. Managing these risks has the potential to create significant value for organisations, with operational losses often a costly item for many organisations. Additionally organisations are often forced to allocate capital to these risks by regulation. Therefore reducing the level of risk frees up capital for income generating activities.
Coupled with the implementation of a new risk management framework, significant business benefits are emerging.
· Defining key and emerging risks and map these using a risk map
· Defining processes and systems, and their related risks and controls
· Defining a set of Key Indicators, KPIs, KRIs and KCIs
· Assessing risks and controls related to the processes and systems
· Defining accountability for risks and controls to individuals
· Automating process and systems related risk and controls dashboards and reporting, while enabling advanced analytics
· Encouraging a collaborative approach to delivering performance via commentary, alerts and other web 2.0 collaboration capabilities