Operational Risk Management
Expert-defined terms from the Postgraduate Certificate in Level 7 Insurance and Risk Management course at London School of Planning and Management. Free to read, free to share, paired with a professional course.
Operational Risk Management #
Operational Risk Management
Operational Risk Management (ORM) is the process of identifying, assessing, moni… #
It involves managing the potential for loss resulting from inadequate or failed internal processes, systems, human factors, or external events.
Key Concepts #
1. Risk Identification #
The process of recognizing potential risks that could impact the organization's operations.
2. Risk Assessment #
The evaluation of identified risks to determine their potential impact and likelihood.
3. Risk Monitoring #
The continuous tracking and reporting of risks to ensure they are managed effectively.
4. Risk Control #
The implementation of strategies to mitigate or eliminate identified risks.
5. Loss Event Data #
Information on past incidents used to analyze trends and inform risk management decisions.
1. Risk Appetite #
The level of risk an organization is willing to accept in pursuit of its objectives.
2. Key Risk Indicators (KRIs) #
Metrics used to monitor and alert management to potential risks.
3. Scenario Analysis #
The process of creating hypothetical situations to evaluate the impact of potential risks.
4. Root Cause Analysis #
Investigating the underlying reasons for risk events to prevent recurrence.
5. Operational Resilience #
The ability of an organization to withstand and recover from operational disruptions.
6. Business Continuity Planning #
Preparing for and responding to events that could disrupt business operations.
Explanation #
Operational Risk Management is essential for organizations to proactively identi… #
By systematically assessing and controlling operational risks, organizations can enhance decision-making, protect their reputation, and improve overall performance. Examples of operational risks include fraud, technology failures, regulatory compliance issues, and supply chain disruptions.
Challenges in Operational Risk Management include the complexity of modern busin… #
Organizations must continually adapt their risk management strategies to address emerging threats and ensure resilience in the face of evolving risks.
In the Postgraduate Certificate in Level 7 Insurance and Risk Management, studen… #
By mastering the concepts and tools of ORM, students will be better equipped to navigate the dynamic landscape of risk management and contribute to the long-term success of their organizations.