What are the most common operational risk measurement and reporting mistakes?

This has been something which I learned during my first job at IndiGo, a common misstep in operational risk management is the failure to align it with the overarching business strategy. This is akin to navigating a ship without a compass; you might stay afloat, but you won't necessarily reach your intended destination. Operational risk measures should be intricately woven into the strategic fabric of the organization. This means ensuring that risk management processes are not just reactive or compliance-focused, but proactive and strategically integrated. Such alignment transforms risk management from a mere safeguard into a strategic tool, driving informed decision-making and fostering a resilient, forward-thinking business culture

Not collecting and analyzing data is the biggest mistake an organization can make since data can indicate any future risks. By analyzing that data, organizations can proactively make important decisions.

The mistake of not involving stakeholders in operational risk management is common. Stakeholders such as senior management and regulators play vital roles. Active inclusion aligns the process with expectations, ensuring support and understanding. Stakeholder feedback continuously improves risk management, promoting transparency and effectiveness in identifying risks. Collaboration strengthens the organisational culture, making the process more adapted to needs and expectations, essential for effective management.

The question here is no involvement of stake holder rather to have sop to get report automatically here is the technology to play a role.

Not acting on your data insights! Treating something that should be a tool that helps you make decisions or guides your steps as simply a report that produces information that people talk about. What's the so what? What's the and then what? You need to take that information, turn it into insight, and then decisively act on that insight.

Most common mostake is favoritism for a particular position. Despite of clear indication and analysis lead to common conclusion , yet that position escaped to bear the responsibility and in long run it will become a burden on organisation to carry. These type of holes must be managed and reported to board.

In addition to all that has been stated, a common and important mistake to avoid is; - Not drawing up a proper Enterprise Risk Register. A risk register comprises the following: 1.) Potential Areas/ Risk factors in a business (including operational risk) 2.) Causes 3.) Impact or Consequences on business 4.) Prioritization or Risk Rating Number 5.) Frequency or likelihood of occurrence 6.) Priority code 7.) Existing controls 8.) Recommended controls 9.) Regularization timeline. In order to develop a solid risk register, all stakeholders must be engaged to give their inputs and insights on subject matters that concern them in the business. This would ensure proper measurement and reporting of operational risk is carried out.

In my experience, When it comes to operational risk measurement and reporting, some of the most common mistakes involve insufficient attention to data quality. This could include relying on incomplete or outdated data, which can lead to inaccurate risk assessments. Additionally, inadequate scenario analysis often occurs, where organizations fail to consider a wide enough range of potential events and their potential impact. Another frequent issue involves a lack of integration with overall risk management frameworks, leading to siloed approaches and missed opportunities for comprehensive risk mitigation. These mistakes can hinder effective decision-making and compromise the ability to proactively manage operational risks.