Strengthening Organisational Resilience through Effective Operational Risk Management (ORM)

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Strengthening Organisational Resilience through Effective Operational Risk Management (ORM)

By Khaireya Sayed Ali, Head of Operational Risk Management, Bahrain Development Bank (BDB)

In today's dynamic financial industry, implementing a rigorous Operational Risk Management (ORM) framework goes beyond merely being a compliance imperative, but rather a calculated strategic approach to ensure sustained organisational resilience and growth.

A robust ORM framework enhances an organisation's capability to withstand potential operational threats, strengthens compliance efforts, and supports executive decision-making. Additionally, it serves to increase the reliability of businesses and ensures that the trust of stakeholders remains constant.

ORM faces multiple challenges at present, particularly in a hyper-digital era where cyber risk and fraud attempts are becoming increasingly sophisticated. Furthermore, the evolving nature of regulatory requirements, in addition to technological progress, requires organisations to be proactive with regards to risk mitigation.

Developing a successful ORM framework involves a timely, systematic and structured approach that encompasses utilising data analytics in identifying and addressing potential threats, fostering a risk awareness culture both internally as well as externally, and strengthening industry collaborations and knowledge-sharing.

Investing in Data Analytics and Tech

Data analytics is essential for early risk detection, exposure quantification, ongoing monitoring, and efficient compliance assurance. Banks can handle a variety of risks with the aid of risk management analytics, such as credit, operational, cyber, and regulatory risks. Investing in data analytics has several advantages that assists ORM practices in the banking industry. It supports data-driven methodologies that enables continuous scanning of the dynamic risk environment. When internal and external data are combined, it provides scientific risk assessments, as well as strong prediction power and the capacity to model complex relationships for a forward-looking approach.

Adopting a Risk Aware Culture

Fostering a broader risk-aware culture is a crucial first step towards achieving ORM excellence in the Bahraini banking sector. Internally, banks should leverage a combination of employee training programmes, internal communication channels, and open discussions to keep staff informed and vigilant of potential risks. Additionally, customer awareness campaigns delivered via SMS, email, social media, and other platforms can significantly increase public awareness about prevalent financial risks.

Strengthening Industry Collaboration & Knowledge-Sharing

Externally, it would be beneficial to ensure that the industry collaborations with the Central Bank of Bahrain (CBB) and banks in Bahrain are consistent. By organising regular knowledge-sharing sessions, stakeholders can benefit from exchanging their experiences, identifying best practices, and collectively working with one another to strengthen the risk management capabilities of the Kingdom’s overall banking and financial sector. A further step could be establishing a committee consisting of representatives from different risk management departments of banks, that could take on the responsibility to amplify knowledge-sharing efforts through routine discussions, trend reports, and circulating information.

By adopting a proactive and collaborative approach to ORM, we can support building a more resilient and competitive financial sector in Bahrain.

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