Operational risk in focus as Covid creates new threats

A new study has said operational risk has been heightened by the global pandemic adding the complexity of the issues means there is no optimal risk culture.

The Institute of Operational Risk (IOR) has released the first three in a series of Sound Practice Guidance documents for risk managers.

The documents focus on Risk Culture, Risk Appetite and Embedding an Operational Risk Management Framework and examine how risks may be identified, assessed, and controlled to help reduce the frequency and severity of operational risk events.

The guides emphasise that there is no one optimal risk culture, nor are the universal characteristics of a ‘strong’ or ‘weak’ risk culture.

The series has been sponsored by Sword GRC and have been authored by Prof. Simon Ashby, FIOR, Professor of Financial Services, Vlerick Business School.

“The need for effective operational risk management is more acute than ever,” said the IOR. “Events such as the global financial crisis or the COVID-19 pandemic highlight the far-reaching impacts of operational risk and the consequences of management failure. In the light of these and numerous event organisations must ensure that their policies, procedures, and processes for the management of operational risk meet the needs of their stakeholders.”

“In the new world of living with COVID-19 operational risk is once again in the spotlight,” explained Prof. Ashby. “I hope that organisations and their risk professionals will seize the opportunity to review and improve their operational risk management practices. These guides provide a great place to start.

“As the modern world becomes increasingly complex people and organisations must learn how to live with operational risk. Once again, the COVID-19 pandemic has put operational risk in the spotlight and highlighted the consequences of poor practice. There has never been a more important time to review and improve the management of operational risk”.

“We at Sword GRC are very excited about this new partnership with the Institute of Operational Risk and the opportunity to sponsor the series of Sound Practice Guides that inform readers concisely about complex risk management issues,” added Keith Ricketts, VP of Marketing, Sword GRC. “Authoritative content that educates can only be valuable to practitioners and executives alike.”

The IOR are already working in the second series of the guides which are scheduled to be released shortly.

They will focus on:

> Risk Categorisation

> Risk and Control Self-Assessment

> Operational Loss Events (Internal and External)

> Operational Risk Governance

> Embedding an Operational Risk Management Framework

> Key Risk Indicators

The three guides are free to access and are available for download from both the IOR website and from the IRM website.