Identifying Risks
The first primary objective of operational risk management is to identify risks that could affect the achievement of an organization’s objectives. This includes identifying potential risks that could arise from the organization’s operations, processes, products, services, and projects. By identifying potential risks, organizations can develop strategies to mitigate or prevent their occurrence.
Evaluating Risks
The second primary objective of operational risk management is to evaluate the risks identified. This involves assessing the likelihood of a risk occurring, the potential impact it could have on the organization, and the cost associated with mitigating or preventing it. This helps organizations make informed decisions about how to best manage the risks they face.
Developing Strategies
The third primary objective of operational risk management is to develop strategies to mitigate or prevent risks. This includes developing policies and procedures, implementing controls, and training employees on how to identify and respond to potential risks. Organizations should also consider implementing risk management software to help monitor and manage risks.
Monitoring Risks
The fourth primary objective of operational risk management is to monitor risks. This involves regularly reviewing the organization’s risk profile and assessing whether the strategies implemented are effective in mitigating or preventing potential risks.
Reporting Risks
The fifth primary objective of operational risk management is to report risks. This involves regularly reporting on the organization’s risk profile and any changes in the risk environment. This helps organizations stay informed of potential risks and take appropriate action to mitigate or prevent them.
Communicating Risks
The sixth primary objective of operational risk management is to communicate risks. This involves regularly communicating with stakeholders about the organization’s risk profile and any changes in the risk environment. This helps ensure stakeholders are aware of potential risks and can take appropriate action to mitigate or prevent them.
Reviewing Risks
The seventh primary objective of operational risk management is to review risks. This involves regularly reviewing the organization’s risk profile and assessing whether the strategies implemented are effective in mitigating or preventing potential risks.
You might find these FREE courses useful
- Program Risk Management in ClickUp
- Risk Management in Personal Finance
- Investment Risk Management
- Market Risk Management: Frameworks & Strategies
- Credit Risk Management: Frameworks and Strategies
- FinTech Risk Management
- Implementing a Risk Management Framework
- Risk Management Specialization
Improving Risk Management
The eighth primary objective of operational risk management is to improve risk management. This involves regularly assessing the organization’s risk management processes and making improvements where necessary. This helps ensure the organization is well prepared to manage the risks it faces.