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Tying Operational Risk Management to Business Performance

Source: Mash Risk Television

ValueBridge Advisors
Brian Barnier, Principal

Runtime: 9:17

Click here to download video.

Key Takeaways:

  1. Drivers:
    • Board and executives asking about value from operational risk management
    • Institution-wide performance reviews in tough times
  2. Challenges:
    • Association with Basel II and national requirements such as Sarbanes-Oxley and Gramm-Leach-Bliley
    • Staff assigned often came from compliance roles
  3. Simple steps for leaders to catalyze the shift:
    • Add prospective risk metrics to the institution's performance reports
    • Make risk metrics meaningful in the institution's project tracking metrics
    • Embed risk in daily communication and training
  4. Rediscover the institution's strengths; ask predecessors how they managed risk pre-Basel II
  5. Three quick tests to evaluate how well operational risk is tied to performance:
    • Use in Decision Making: Do risk considerations affect daily decisions at all levels in a meaningful, not perfunctory, way?
    • Use in Reporting: Are risk indicators tied directly to performance indicators?
    • Time Sensitivity: How frequently is risk considered? Is it so infrequent or retrospective that it isn't relevant to forward-looking decisions?
  6. For evaluating overall progress, is maturity evaluated against formal benchmarks, such as those found in ISACA's Risk IT and the Open Compliance and Ethics Group's "Burgundy Book?"
  7. Personal opportunities for risk leaders to build their own seat at the table:
    • Relevance through performance metrics focus
    • Collaborate in knowing the business and how to fix risk
  8. Additional resources:

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