What do you mean by operational risk management term?

ORM is a continuous, systematic process of identifying and controlling hazards to increase the certainty of outcomes.
This process includes detecting hazards, assessing risks, implementing, and monitoring risk controls to support effective risk-based decision-making. “Risk management is essentially decision making under uncertainty.

Failed internal processes may lead to losses in the business. Moreover, systems and external events may lead to disruption in the business processes.

  • Operational Risk Management takes care of the loss in any organization resulting from such activities. These losses may or may not be financial (direct or indirect). These losses may result from inefficiencies in the resources adopted (human or technical resources) in an organization. This will ultimately harm the profits (bottom line) in a company and tarnish the image and reputation it enjoys in society. Hence, proper controlling mechanisms should be put in place after effective planning and any issues should not be overlooked.

  • Strategic, reputational and financial risk are excluded from the ambit of Operational Risk Management. The risks that have the maximum impact on the organization and its employees should be prioritized and taken care of before the others and the concerned employees are held accountable for the same.