IRM Viewpoint - Seeking the North Star

Seeking the North Star

Providing leadership to the profession and embedding operational risk deeper into more industries are key goals for IRM’s Operational Risk Group

Paul Saunders (CFIRM) is chair of IRM’s Operational Risk Group and managing director of the risk consultancy GDFM.

I am pleased to have been asked to chair IRM’s Operational Risk Group, which includes the Institute of Operational Risk (IOR), acquired by IRM. Together with my fellow committee members, we will aim to embed IOR’s offerings deeper into various industries – focusing largely on the Certificate of Operational Risk Management. In addition, we will seek to help grow the memberships of IOR and IRM, as well as publishing thought leadership in key risk areas. Finally, we will continue the process of embedding IOR as an integral part of IRM, thereby helping to develop its various communities.

I am delighted to be undertaking this role at a time when organisations and their risk managers face challenges from multiple high-impact events that would typically come along over a lengthier period of time – numerous tail-events in quick succession, for those that model operational risk. The challenges from a war in Europe, a sharp and deep global recession and the pandemic look likely to run for an extended period. Organisations will need to rethink traditional strategies.

Ongoing impacts

The impacts of events – including shifts in social behaviours – are likely to test the resilience of business strategies, and stretch risk management frameworks and systems of internal control. While it is possible to hope that these events will have speedy and peaceful resolutions, organisations must prepare for the ongoing adverse outcomes and perhaps readjust notions of what business as usual means.

In this challenging landscape, we should be proud of what the IOR and IRM communities have achieved both collectively and individually to help position our members and their firms well. As a community, we have always continued to lead, thinking about what it is possible to be doing to manage the ever-changing risks landscape we now face.

But as events continue to unfold, we risk professionals may need to change our focus continually. The legacy data around risk events and impacts may need to be further stressed to model and manage operational risk. Scenario planning is proving to be a key tool in fastchanging areas. But organisations must nurture and retain the key talent and adapt their processes to new technologies to succeed.

Meeting the challenges

To meet the many challenges that lie ahead, we need to embark on a renaissance of risk management. That includes assessing quickly what new risks mean for organisations and how those can be incorporated into strategic planning, keeping pace with technological changes within organisations to manage both threats and opportunities, and demonstrating value to the enterprise by thinking about what is beyond the immediate horizon for risk management programmes.

When volatility subsides, forwardlooking companies that have invested in sound risk management systems and talent will find themselves in a stronger position.

In the coming months and beyond, we will work to expand our footprint across various industries by embedding IOR and IRM offerings and continue to be viewed as an integral part of the overall risk management community. As we navigate through changing and evolving times, we aim to be seen as the North Star of operational risk management by providing guidance and insight into key risk areas.