1. Operational Risk Management Framework
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2. Losses can be defined as financial or non-financial
Operational Risk
In short, Operational Risk can be summarized as risk of loss due to failed Process, People, Systems, or Legal
Losses can be defined as financial or non-financial
$$$, losses (fines, penalties, lawsuits and interest payments)
Loss of market share and long-term revenue
Eroded reputation, share price, brand value and image
Customer dissatisfaction
Lost confidence (Investor, Auditor, Internal Management)
Lost opportunity
Lost sales and missed trade opportunities
Inability to grow/scale-up
(resources not focused on high-value opportunities)
Failed Processes are …
Ineffective:
Have inadequate internal controls to prevent or detect loss
Do not optimize business performance
Do not optimize Team / Personnel performance
and/or Inefficient:
Consume more or less resources than necessary

3. Key Source Of Operational Risk: Process
Processes are a sequence of interdependent and linked procedures which, at every stage, consume one or more resources (employee time, energy, machines, money) to convert inputs (data, material, parts, etc.) into outputs; these outputs then serve as inputs for the next stage until a known goal or end result is reached
PROCEDURES
Interdependent and linked
INPUTS
OUTPUTS
NEXT
STAGE
Data
Material
Parts
Employee Time
Energy
Machines
Money
Invoices
RESOURCES
GOAL
Desired End Result
If goals are met, this is an effective process
If goals are met with optimal resources, this is an efficient process

4. Project Approach 1. Identification and Measurement
of Critical Processes
2. Conduct Operational Risk Assessments for Critical Processes
3. Identify and Implement Process Improvements
4. Monitoring and Reporting
Identify all major processes within the organization
Host stakeholder engagement sessions
Rank major processes based on operational risk profile
Develop critical process quadrant and consolidate results
Assess business process
Determine if current processes, internal controls, and people mitigate Operational Risk
If not, quantify severity of operational risk
Determine if resource allocation is aligned with Operational Risk profile
Reallocate resource distribution where required
Develop and implement process improvements and internal controls as required
Develop metrics for processes
Streamline, benchmark, and automate
Document and report learnings
Measure performance against metrics