Operational Risk Management

Operational risk affects businesses. Unchecked control failures and minimised issues can lead to wider risk materialisation & firm-wide crises.

Organisations in industries face operational risk wherever they turn. This includes risks arising from employee conduct, third parties, data, business processes, controls, as well as cultural, moral, and ethical risks. All these types of risks are layered on top with technology risks, which are compounded as organisations embrace new technologies like automation, robotics, and artificial intelligence.


Small control failures and minimised issues if these are left unchecked or not tested, can lead to greater risk materialization and firm-wide failures. This may lead to a chain reaction that can be fatal to an organization’s reputation and possibly even to its existence. The maturity of operational risk varies by industry. However, all successful organizations recognize that greater awareness and appreciation across boards and C-suite executives lead organizations to better recognize, manage, and understand operational risk management steps.


To prevent an event that could cripple or cease business, organizations should consider gaining a better understanding of their operational risk profiles as well as their risk appetite and tolerance. Leaders should formulate and adopt their own risk culture. They also need to prioritize, understand, and better articulate the materiality of the risks which their organization is facing, in an effort to make informed decisions that balance organizational needs, client and customer demands, product and service specifications, and shareholder requirements.


With stakes this high, it is time to make operational risk management an organisational imperative and recognize the process as a critical C-suite tool. Effective management of operational risk can encourage greater risk taking and increased visibility.


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