How can you ensure operational risk management has the right technology and personnel?

Ensuring operational risk management success by aligning advanced technology for risk identification and analysis. Need to invest in skilled personnel, providing training and resources. Fostering a collaborative culture where tech integrates seamlessly with skilled teams, creating a robust framework to identify, assess, and mitigate operational risks effectively.

In my opinion to ensure effective operational risk management, it's crucial to align technology and personnel. Conduct regular assessments to identify technological needs, invest in training for personnel, and foster a culture that values risk awareness. Regularly update systems to address emerging risks and ensure staff is equipped to handle evolving challenges.

Operational Risk Scenario Analysis (ORSA) serves as a crucial method for evaluating the potential consequences and probabilities associated with operational risk events. These events encompass a spectrum ranging from fraud and cyberattacks to human errors and natural disasters. Through the systematic assessment provided by ORSA, organizations gain insights into the vulnerabilities and exposures inherent in their business processes, systems, and controls. Beyond mere identification, ORSA empowers businesses to proactively devise contingency plans and robust mitigation strategies. By doing so, organizations not only enhance their resilience in the face of unforeseen challenges but also fortify their overall risk management framework.

Operational risk scenario analysis is a process where organizations simulate "what if" situations to identify and mitigate potential risks affecting their operations. It involves envisioning various internal and external risk events, from system failures to natural disasters. This proactive approach is crucial for preparing for unexpected events, guiding decision-making, and ensuring regulatory compliance. It enhances business resilience and continuity, allowing for secure, efficient operation in an unpredictable world.

Operational risk scenario analysis (ORSA) provides an opportunity to assess reactions to events self-contained setting to do everything from crisis response, crossing risk appetite thresholds, increases regulator scrutiny, or control performance thresholds. Think of ORSA as an ability to play the "what if" scenario to see how your business unit, product, or risk infrastructure performs.

For ORSA, having the right technology is like having a super tool kit. Imagine trying to build a complex puzzle; you need the right pieces and a good plan. Technology helps collect important information about risks, like gathering puzzle pieces from different boxes. It's like a detective tool, finding clues and patterns that show what risks might happen. For creating scenarios, technology is like a storybook, helping us imagine different 'what if' situations and seeing how they might turn out. Then, it’s like a reporter, sharing these stories with important people in the company, so they understand and can make smart decisions. It's essential to keep updating our tools and stories to stay sharp and ready for any challenge.

Having the right technology is like any other tool used to help prevent or minimise disruptions to processes. That implies that those individuals using the tool understand the business and the potential exposures. It’s all well and good to employ these analytics but without a comprehensive understanding of the points of risk to the core business processes it’s like the old adage of the blind man picking up his hammer and saw. The total reliance on AI or AI generated analytics to forestall or “prevent” disruptions to operations has and will continue to produce blind spots. A tool is only as good as the individual using it.

No podemos volvernos tan radicales sobre la incidencia de la tecnología en la manera como se obtiene información con ORSA. Se necesitan más científicos de datos que máquinas, se necesitan más personas con niveles de conocimiento más profundos y sólidos que sean capaces de interpretar el tsunami de data que estamos produciendo a través de todos los elementos tecnológicos que recogen datos en nuestro planeta. Comprender las tendencias de riesgo implica tener algoritmos más confiables y precisos y esto no se hace solo con Machíne learning. Hay que aportar sensibilidad, pericia, perspicacia, astucia y malicia. Los datos solo serán estadísticas puras inertes sin la combinación de las cualidades humanas del pensamiento basado en riesgos

Right technology is key in achieving the business goal. This can be achieved through proper definition of the end goal, formulating processes that will enable achieving the end goal and designing a phase testing of user acceptance and live confidence scenarios. The result of the phased test would help validate the efficiency and effectiveness of the process as this gives way to analyze reports, trigger mechanisms, patterns and the kind of management information that can be derived to obtain a stable operational risk management environment.

Having the right technology for Own Risk and Solvency Assessment (ORSA) is crucial for several reasons Data Management: Advanced technology enables efficient collection, analysis, and management of vast amounts of data, essential for accurate risk assessment and decision-making. Risk Modeling: Sophisticated technology allows for complex risk modeling and scenario analysis. Compliance and Reporting: Proper technology facilitates compliance with regulatory requirements by providing tools to generate accurate and timely reports. Continuous Monitoring: With the right technology, organizations can implement real-time or periodic monitoring, enabling them to adapt swiftly to changing risk landscapes and make informed decisions.

The right personnel makes all the difference. Someone who understands the process and can identify them as material/ significant etc. Identify the links, the weakness, the back ups and overall impact a broken process can have.

Managing risk takes a robust and intelligent team. It would help if you had creative problem-solvers who can spot issues early. Folks who care about doing things the right way. And leaders who bring everyone together. One person can't do it alone. It takes people with different skills to work as one crew. Some may be wizards with numbers or computers. Others know the inner workings of your business. Some have seen it all before. When these minds come together, they can tackle any challenge. This team of doers and thinkers will see risks on the horizon. They create plans to steer clear of danger. And they help the company feel safe to try new things. With the right team, you're ready for whatever comes your way!

Operational Risk Scenario Analysis requires not only qualified risk professionals but also subject matter experts from individual lines of businesses to ensure a full understanding of underlying risk scenarios are captured.

Incorporating an external perspective (e.g. from consultants and experienced risk analysts) can help avoid institutional group think and optimise your policies based on industry best practice. Regular audits and improvement plans will ensure a culture of continuous improvement to ensure risks are being actively addressed and managed.

It is important to have the right personnel to understand the business processes and the systems tools to help in applying the operational risk framework, policies and procedures to identity potential risks in those areas and their management thereof. The right risk managers have the ability to apply risk taxonomy or risk types which ensures full coverage of potential risks in all areas. It is important as well that risk managers empower themselves in many aspects such as compliance, regulations and so on though they may not be experts, but that knowledge will go a long way and add value to their organisations as second line of defense.

All areas of the business generate risk and influence the risks in other areas - interconnected risk. The challenge is to keep the areas (yeah, the ’silos’) so well connected that they realise what the interconnected risks are and how to manage them. The technology follows.

You can ensure you have the right technology and the right people by knowing exactly what your needs are and where you want to go. Hiring practices and implementing technology strategies all align with your company's current mission and long term vision.

Ensure operational risk has the right technology and staff by conducting regular skill assessments, providing continuous training, staying abreast of technological advancements, implementing robust performance metrics, fostering a culture of adaptability, and aligning technology solutions with specific operational risk management needs. Regularly review and update both technology and personnel strategies to maintain relevance and effectiveness.

In my experience it is critical to have the right technology and subject matter experts to document and track identified risks across an organization.

Spotting and fixing business risks takes the right gear and crew. First, hunt down the best tools, like clever computer programs. These robots can sniff out problems early! Next, build a rockstar risk team. Grab thinkers who can brainstorm solutions. Find fixers who do what it takes to make things right. Toss in some superstar number-crunchers too. They’ll spot patterns and trends before anyone else. With the right tech tools and people power, your business can tackle the toughest problems. And act fast when danger lurks around the corner! So put together the ultimate risk-busting package.

Radically new technologies such as Artificial intelligence (AI) have added a new dimension to the existing risk management practice. Operational risk events that may occur when AI is in action, are really in uncharted territory. While we are at a nascent stage in AI, it would not be out of place to start imagining operational risk scenarios in an AI enabled environment, so that we could quickly develop risk models and deploy appropriate ORSA techniques,

Before selecting the right technology and personnel for operational risk management, you have to have alignment on the purpose. The organization needs to define the How, What, and Why in providing operational risk management insights to achieve better process design and risk mitigation. Then, determine what should be the user (i.e. customer) experience for an operational risk management program. This will help you determine the needed attributes of a technology solution to support the successful rollout and sustainable operational risk management outcomes.

Ensuring effective operational risk management involves: 1. Identify the necessary skills for personnel involved in risk management. 2. Implement ongoing training programs to keep personnel informed 3. Hire individuals with diverse skills and experiences 4. Invest in advanced risk management technologies to enhance efficiency. 5. Cross-Functional Collaboration Encourage collaboration between risk management, IT, and other dpts 6. Periodically assess the effectiveness of both personnel and technologies 7. Ensure top management supports the integration of qualified personnel and technology into the operational risk management framework. 8.Foster a culture of continuous improvement

1. An ethical hacking team that tests the systems against external risks from time to time. 2. Repetitive and Regressive assessment of the risks after major changes in the firm, may it be infrastructural, operational or regulatory in nature. 3. Structured Compliance and Regulatory Reporting teams that are watching day in day out exposures and risks for the firm and reporting any anomalies immediately. 4. Customized, Business Specific Operational Risk Framework for each business unit in the firm tailored to measure, specify, assess, report and time-define risks for the specific business unit and define corrective actions. 5. Proactive measures like aligning operations to changes in external factors like regulatory, political, changes etc

For risk management, there is a wonderful insight from the High Performance Organisations area, for example Nuclear power generation - the insight is to give people time (ongoing, weekly scheduled time, up to 20%) to challenge the current risk mitigations, to think about where a threat might emerge. Put ‘permanent risk anxiety’ into action.