Operational risk management is the process of identifying, assessing, and controlling risks that may arise from operational factors. It aims to reduce risks that could affect a project's successful and timely completion. The key steps in operational risk management are to identify hazards, assess risks, develop controls, implement controls, and supervise/evaluate. It is a proactive approach that can improve safety and reduce losses without inhibiting flexibility or requiring a zero-risk mindset.
Operational risk management is the process of identifying, assessing, and controlling risks that may arise from operational factors. It aims to reduce risks that could affect a project's successful and timely completion. The key steps in operational risk management are to identify hazards, assess risks, develop controls, implement controls, and supervise/evaluate. It is a proactive approach that can improve safety and reduce losses without inhibiting flexibility or requiring a zero-risk mindset.
Operational risk management is the process of identifying, assessing, and controlling risks that may arise from operational factors. It aims to reduce risks that could affect a project's successful and timely completion. The key steps in operational risk management are to identify hazards, assess risks, develop controls, implement controls, and supervise/evaluate. It is a proactive approach that can improve safety and reduce losses without inhibiting flexibility or requiring a zero-risk mindset.
Operational risk management is the process of identifying, assessing, and controlling risks that may arise from operational factors. It aims to reduce risks that could affect a project's successful and timely completion. The key steps in operational risk management are to identify hazards, assess risks, develop controls, implement controls, and supervise/evaluate. It is a proactive approach that can improve safety and reduce losses without inhibiting flexibility or requiring a zero-risk mindset.
Management If You Dont Actively Attack the Risks, The Risks Will Actively Attack You. -Tom Gilb
without risks there is no reward
The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.
Charles Tremper Definition Risk Any anticipated unfavorable event or circumstances that occur while the project is underway.
If the risk become true
It can hamper the successful and timely completion of a project.
Therefore, it is necessary to anticipate and identify
different risks. What is Risk Management? Reducing the impact of all kinds of risks that might affect a project.
Risk Management is a decision making process aimed at
reducing the number of losses of people, equipment and material due to accidents.
It is a pro-active approach to accident reduction which
has been proven on the battlefield as well as in private sector companies. What is ORM? Risk management is the process of identifying, assessing, and controlling risks arising from operational factors and making decisions that balance risk costs with mission benefits. Risk is characterized by both the probability and severity of a potential loss that may result from hazards. What is Operational Risk Management? The process of detecting, assessing, and controlling risk associated with organizational operations.
It is a logic-based, common sense approach to making
calculated decisions on the various factors associated with any kind of activity.
Operational Risk Management doesnt just reduce
mishaps, but it improves our ability to accomplish the task efficiently and effectively. What is Operational Risk Management? These factors include: human(s) machine(s) environment management and mission. Why is ERM Important? Is this how you feel most ERM Pathways look to you. The regulators have given enough guidance and direction on the different elements of managing risk at the enterprise level. There is however no cohesive guidance or model that applies to all sizes in all industries when it comes to Enterprise Risk Management practices.
This leads to many challenges
within a franchise and within the industry. Often to avoid obstacles or traffic we listen to traffic news and avoid congested roadways..So the natural question should be who is doing ERM the right way? What is the right way for ERM? Is there one way to do ERM? Why is Risk Management Important?
No issues loom larger today
than operational risk in all its Excerpt from dimensions Remarks by Thomas J. Curry Comptroller of the Currency, OCC May 2012
12 Why Care About IT-related Risk? Enterprises are dependent on IT Need to cross IT silos of risk management Important to integrate with existing levels of risk management practices An IT risk management program is crucial in not only managing the enterprises exposure to risks, but also improving overall business decision making. Enterprises must periodically assess and continuously improve their risk management maturity levels IT Risk Management: What? Visibility on IT Risk The domain of IT Risk can be visually represented as 4 intersecting landscapes of: Threat Asset Impact Control The organizations capability to understand and manage risk requires information from each landscape. Security metrics, then, should create knowledge that improves managements capability to make decisions and execute on them. Visibility on IT Risk Business Impact Operational Legal Reputation IT Control Preventative Detective Limitative Asset Landscape: Information IT Infrastructure Business Processes IT Threat Compromising Integrity Confidentiality Involving Data Breach Availability Disruption of IT Services Operational Risk Management Why ORM? It is impossible to completely reduce all risk. We must know to control hazards in order to decrease the amount of risk that we are exposed to. To ensure necessary risks are taken
ORM:
Is an important tool for training realism
Provides potential to expand capabilities Assures necessary risk taking to enhance superiority Natural evolution from traditional risk management Systematic decision-making tool that balances risk cost & benefits Operational Risk Management OBJECTIVE of the ORM process:
Protectingpeople, equipment and other resources,
while making the most effective use of them.
Preventing accidents, and in turn reducing losses, is
an important aspect of meeting this objective.
In turn, by minimizing the risk of injury and loss, we
ultimately reduce costs and stay on schedule. Operational Risk Management Applicability Risk management assists management in: Conserving resources and avoiding unnecessary risk. Making an informed decision Identifying feasible and effective control measures where specific standards do not exist. Risk management does not: Inhibit the management's flexibility and initiative. Remove risk altogether, or support a zero defects mindset. Require a GO/NO-GO decision. Remove the necessity for standard practices. Principles Making risk decisions at the appropriate level. Accepting no unnecessary risk The five steps 1. Identify hazards 2. Assess hazards to determine risk 3. Develop controls and make risk decisions 4. Implement controls 5. Supervise and evaluate Importance of Software Risk Addresses Complex Software Systems Focuses Projects on Critical Risk Items Provides Techniques for Handling Risk Items Reduces Software Costs by Reducing Rework Usually 40-50% of software costs Making informed decisions involves the evaluation of risk improvement Costs, benefits, and risks The evaluation of the impact of current decisions on future options Risks within a system Context This process of risk management embodies Process of Risk Management This process of risk management embodies the identification, analysis, planning, tracking, controlling, and communication of risk.
A continuous set of activities to identify,
confront, and resolve technical risk Risk Assessment and Control Risk assessment The objectives of risk assessment is to rank the risks in terms of their damage causing potential.
Forrisk assessment, each risk should first be rated in two
ways:
The likelihood of a risk coming true (r)
The severity of damage caused due to the risk (s)
Based on these factors
The priority of each risk can be computed as
p =rs Risk identification
The project manager needs to anticipate the risks in
the project as early as possible so that the impact of the risk can be minimized by making effective risk management plans.
In order to be able to systematically identify the
important risks, it is necessary to categorize risks into different classes.
Main categories of risks
Project risks Technical risks Business risks Main categories of risks Project risks Concern various forms of Budgetary, Schedule, Personnel, Resource and Customer- Related Problems. e.g. schedule slippage Software is intangible, it is very difficult to monitor and control software projects.
Technical risks Concern Potential design, implementation, interfacing, testing, and maintenance problems. E.g. incomplete specification, changing specification, etc.
Business risks Includes An excellent product that no one wants, losing budgetary, etc. Risk Containment After all the identified risks are assessed, plans must be made to control the most damaging and the most likely risks.
Strategies used for risk
containment: Avoid the risk Discuss with customer to reduce the scope of the work Giving incentives to engineers to avoid the risk of manpower turnover, etc.
Transfer the risk
Getting the risky components developed by a third party Buying insurance cover, etc.
Risk reduction Planning ways to control the damage due to a risk If there is risk that some key personnel might leave, new recruitment may be planned. Techniques for Handling Risks Cost Factor To choose between the different strategies of handling a risk, the project manager must consider the cost of handling the risk and the corresponding reduction in risk. Risk exposure before reduction risk exposure after reduction Risk leverage = Risk reduction of cost Operational Risk Integrated Approach Control Operational Operational Self- Business Insurance Risk Risk Assessment Continuity Capital
Proactive identification of risks
Assessment and evaluation Scenario analysis Operational Risk Integrated Approach Control Operational Operational Self- Business Insurance Risk Risk Assessment Continuity Capital
Assess controls CSA process Review control weaknesses Track actions Link control evidence to risks Review incidents as evidence of control failures Operational Risk Integrated Approach Control Operational Operational Self- Business Insurance Risk Risk Assessment Continuity Capital
Mitigation of operational risks
Crisis Management Team & Plan Incident Management Teams Crisis Management Centre Work-Area Recovery Disaster Recovery strategy Operational Risk Integrated Approach Control Operational Operational Self- Business Insurance Risk Risk Assessment Continuity Capital
Risk transfer Placement Claims Handling Specific perils e.g. Buildings/Contents, Business Interruption Insurance Advice & Guidance Operational Risk Integrated Approach Control Operational Operational Self- Business Insurance Risk Risk Assessment Continuity Capital
