Management / #R2R2015: How to use operational risk to your advantage
#R2R2015: How to use operational risk to your advantage
1 May 2015 |
A panel discussion at Risk to Reward 2015 in London examined operational risk in organisations and how firms can use it to their advantage.
Caben Thancanamootoo, an industry expert, said: “How to provide reward is to protect your balance sheet by looking at whether or not your processes are efficient.”
But Thancanamootoo believes risk management is not well-understood.
Graham Davies, group head of operational risk at the London Stock Exchange Group, said: “Industry needs to think about vulnerabilities out there and loss of data.
“To defend an organisation against cyber threats, an institution needs to make sure all employees are aware of the risks.”
According to Thomas Cook’s director of enterprise risk and audit Lee Bradley, processes must be flexible to allow boards to respond to changes of risk.
In the airline industry, terrorism is a big threat and there is a worry cyber criminals could attack industrial controls.
“We need to consider the trend of risk, the speed of onset – is it increasing or decreasing?” Bradley said. “Operational risk is a subset of a wider category of risk.
“It is about moving 23 million customers a year. There are cyber, geopolitical, risks associated with delivering our service to our customers.”
It is also important to empower staff members to deal with potential risks to an organisation.
Diane Teasdale, head of corporate governance at Cumbria Partnership NHS Foundation Trust, explained their aim is to achieve have a “line of sight” to operational risks.
These can be all sorts of things such as patients being seen when they need to be seen. How are these events impacting the trust overall?
“Every member of staff is empowered to raise concerns where things are not being effectively managed,” Teasdale said. “It is empowering the staff to flag where they think there are opportunities for improvement.”
According to Justin Jenk, managing partner at Raktas, risk is like a coin. It has got a flip side and an unexpected outcome normally pushed by human behavior.
“Behavioural ethics is the fastest growing area of academia, to understand what needs to be done, how to respond when the unusual happens and make individuals accountable,” he said. “The thing with risk is to spot it when it is coming and react.”