CEOs, COOs and the rest of the c-suite will always talk a good game when it comes to operational risk management and how their organisation manages, mitigates and prioritises risk. They know that risk is everywhere in 2020 and broadly speaking, they are prepared to invest in the risk management software that is required to manage risk effectively.
Yet how seriously does the average c-suite in a mid-sized or larger business, really take risk management? For many organisations, operational risk management is still perceived as a somewhat defensive business function, there to prevent bad events from impacting the company more than it has to.
But addressed effectively, with the right risk management software and a risk or GRC team that is properly funded and resourced, then operational risk management can help to provide huge competitive advantage. To get to that position of using risk pro-actively however, it is essential for the c-suite to fully get behind operational risk management.
What is operational risk management?
The nature of risk and threat in modern business is wide and varied, covering everything from non-compliance to wider economic uncertainty and from cyberattack to malicious insider activity. Some of these might result in a small inconvenience, while others could be catastrophic to the business.
Operational risk management refers to the overarchingmethodology and strategya business puts in place to ensure the smart and effective day-to-day management and mitigation of risks. Doing business is inherently risky, and failures in control can mean that smaller issues escalate and become much more impactful.
Such chain reactions can be hugely damaging, which is why the last decade or so has seen greater awareness of operational risk management across company boards and c-suite executives. They have a more evolved understanding of the nature of risk and also the impact it can cause, if not managed properly. Despite this, there remains a tendency to view risk and risk management software as mostly defensive.
Deploying operational risk management proactively
Operational risk management is really all about improving an organisation’s decision-making. There is no real reason why this cannot be applied positively and pro-actively as it can be defensively and reactively.
When it starts adding value in this way, the operational risk management function will start to wield more influence over the c-suite, which in turn will see even more value in it and support it more effectively. It’s important therefore, to use this technology in a way that delivers the most impact to a business.
Operational risk management also needs input and direction from other business functions – it cannot operate in silo – and should be perceived and positioned as a partner to them. Finally, operational risk management needs to change perceptions of it, from something that prevents risk to something that encourages more risk taking.
Its value lies in making decisions based on its recommendations, not just deploying it for reporting Used in this way, and with successes tracked and highlighted, then operational risk management can become significantly more influential to a business.
The right approach to operational risk management
Oxial works with a range of partners including E&Y and BDO, all of which have a deep understanding of the risk landscape facing businesses in 2020. They can advise on compliance requirements, what cybersecurity threats are round the corner (and the impact they might have) and have knowledge of all manner and types of risk.
By combining this expertise with Oxial’ssGRC software, organisations can manage all of their risks – data, cybersecurity, compliance, sustainable governance, digital transformation and much more – in one platform, effortlessly and effectively. This allows a more fluid and informed approach to decision-making around risk and means that businesses can begin to use risk as a way to gain competitive advantage.
Operational risk management does not have to be a defensive business function at all. Yes, it can and should be deployed to minimise the damage caused by potential threats to the organisation, but it can also be utilised to inform decisions in more positive and pro-active ways, which can have an impact on brand recognition and even financial performance.
Oxial has market-leading risk management software and a team of operational risk management experts that have worked with some of the biggest companies in the world to help them manage and mitigate risk. If you think your organisation could benefit from a new approach to operational risk management, then please get in touch with us here.
