What are the most effective strategies for monitoring and reporting operational risks?

The foundation of effective monitoring and reporting of operational risks begins with a clear definition of risk appetite and tolerance. Risk appetite represents the threshold for the amount and type of risk an organization is willing to embrace in pursuit of its objectives. Conversely, risk tolerance signifies the level of deviation from this predefined risk appetite that an organization can comfortably endure. Establishing and understanding these parameters not only guide risk management strategies but also provide the essential framework for assessing and communicating operational risks accurately and comprehensively. Ahmed AlRashed

Knowing your risk appetite and tolerance levels, both upper and lower, are required to be effective in ensuring the business remains within what has been acceptable, however they do not carry out the task of monitoring and reporting. Risk appetite and tolerance allow you, within the monitoring aspect to undertake the appropriate decisions to adjust as and when needed, then report on a continuous basis, the effectiveness of those same decisions.

Risk appetite is a forward-looking measure that defines how much risk the organization is comfortable with, given the potential rewards. Risk tolerance is more quantitative, describing the actual capacity to handle losses or negative outcomes without being severely impacted

Risk appetite and tolerance is a decision taken by senior management. By defining these 2 clearly, you establish measurable criteria. What you can measure you cannot manage. These 2 measures are important in the operational risk space. Failures of internal processes that affect the operations of the business need to be closely monitored. With the advent of digitisation & introduction of Internet of Things, many processes are being automated & a greater reliance is moving to machines/systems. Automation is good if it results in better controls, lowers costs & improves operations thereby reducing operational risks. Including robust cyber security & associated controls will enhance the operational environment & help mitigate operational risks.

This clarity must be among all concerned team members at all defense level 1st line 2nd line and 3rd line ..it will help as - focus will be on key areas ,it's mitigants ,save time cost energy of an individual - it will keep us focused towards goals - risk indicators will be easier to identify - will help the entity to reach its goal and objectives

Remy that the subsequent step in the process of effective operational risk management involves the identification and assessment of these risks. This entails drawing insights from multiple sources of information, including internal audits, incident reports, customer feedback, regulatory updates, and market trends. By comprehensively gathering and evaluating this data, organizations can gain a holistic view of their operational landscape, allowing them to proactively address potential risks, enhance resilience, and ensure the continuous pursuit of their objectives.

Operational risks arise - people - process -system - internal and external factors We can identify risks at each level and keep our responses ready to tackle any risk from any causes Yes external factors not in out control, we can plan in advance based on scenario likely solution with plan a plan b... With this way we cannot eliminate but manage the risks for better rewards

Risk management is an ongoing process. Regularly monitor identified risks, reassess them as necessary and be vigilnt for any new or emerging risk

Monitoring review and course correction - monitoring to know how effective the mitigants are effective, current challenges..most important - review each parameter identification, management ,the way implementation happening all aspect and looks for improvement - once 2 steps done corrective measures and again monitoring course correction ,some references can be taken at this level from coso erm 2017..

Usually, in the final step of robust operational risk management, effective reporting and communication take center stage. Utilizing suitable and consistent formats such as dashboards, scorecards, heat maps, or reports is pivotal. These formats serve as powerful tools to present and visualize operational risk data, shining a spotlight on critical issues and insights necessitating attention or action. Equally crucial is the proactive communication of operational risks to pertinent stakeholders, including senior management, board members, regulators, and auditors. Ahmed AlRashed

Monitoring and reporting operational risks require a comprehensive approach to ensure effective risk management. Some of the most effective strategies include: 1. Establishing a robust risk management framework. 2. Implementing regular risk assessments. 3. Utilizing key risk indicators (KRIs): to track changes in risk levels and trigger timely responses to mitigate potential threats. 4. Enhancing internal controls: Implement strong internal controls to prevent, detect, and correct operational risks before they escalate. 5. Reporting and communication: Establish clear reporting mechanisms to ensure timely and accurate communication of risks to relevant stakeholders, including senior management and the board of directors.