The future of operational risk practices: Evolving as the risk landscape changes

Article

03/05/2024

Disclaimer: Opinions are of Sean Titley, as an individual, not attributed to any particular organization. How has the risk landscape changed due to the impact of COVID-19? If anything, it has focused attention on Operational Risk even more, as, apart from the obvious economic and credit risk related effects, the risks brought by COVID-19 have been operational in nature – to pick a few: People Risks (direct and indirect effects, such as mental strain/burnout from constant working from home), Technology and Process Execution Risks (adapting system use and processes to WFH), Information Security and Fraud (increased attacks and scams, targeting potentially weakened controls). What are some of the key lessons learned from the pandemic? The pandemic is global by nature and it is the first time in the modern age of digital communication that most of the world’s population has been affected by a single event – governments will hopefully re-learn the importance of global co-operation, given the wide variety of responses. It is important to continue to look at ‘severe yet plausible’ risks as we assess our risk landscape, taking a forward-looking approach to emerging risks. It posed many challenges to our assumptions about working patterns and the risk landscape, many of which have led to improvements in working practices and our approach to risk management. Most firms will learn to adapt to a ‘hybrid’ way of working – ideally balancing the positives of a flexible work environment and the advantages of being able to interact in person, in groups and in teams. We can work from home successfully and mitigate the additional risks as well as take advantage of the opportunities, but there remain huge benefits of interacting face to face as well as Teams and Zoom calls. Conversely, we can continue to take a global approach to providing training via webinars as well as face to face, enabling risk professionals in all countries to share their approaches. What is the future f