Workplace Solutions - Operational Risk
RISK MANAGEMENT -- WHY BOTHER? Operational Risk
Just the words RISK MANAGEMENT make many leaders in the consumer lending
industry roll their eyes. Why? Traditionally risk management has been
perceived as part of a volume prevention exercise and any effort
to put resources against assessing and maintaining the right amount of
risk is done so with the enthusiasm of having one?s teeth drilled.
Yet it can?t be avoided. Every day the business activities that are
carried on create risk. We have always been aware of risks such as
Credit, Market and Liquidly risks and have dealt with them as they
appear. But we have been unable to bring them all together and
understand how they impact the company?s success or distinguish how much
profit we would have made without that risk. How then can company
leaders understand and control risks on a company-wide basis? The answer
to this question lies in the development and implementation of
Operational Risk Management in your organization.
Operational Risk is defined as the risk of financial loss due to a
failure of people, processes and/or technology as well as from external
events. While many of the elements of an Operational Risk program, such
as Quality Control, Regulatory Compliance, Management Self-Assessments
and Business Continuity Planning, are already familiar to most leaders
in the financial services industry, it is the through the unification of
these various practices and the linking of them to the organizations?
financial success that the real benefit is achieved.
There are three areas of an Operational Risk Management Program. These
include Global risks such as catastrophic disasters; Product/Service
risks which include poor quality product that cannot be sold or unhappy
customers and; Ancillary risks such as personnel and financial
management risk. All of these risks have the potential to increase costs
and decrease profits. You can address these risks by first understanding
what they are, where and when they occur and controlling them through
the data your organization produces.
rjbWalzak Consulting can provide guidance in the identification and
assessment of the Operational Risks within your company and help you
develop management controls and the corresponding reports that indicate
the level of operational risks. More importantly, we can guide you
through the process of establishing relationships between these various
risks so that future reports will provide you with real-time information
on issues that face the organization. You will be able to proactively
address these issues rather than react; you will be able to take
advantage of opportunities quickly to get ahead of the competition and
ultimately you will be able to TURN RISK INTO REWARD