Benefits of Operational Risk Management

15 Nov

Operational manages are bestowed with the responsibility of coming up with strategies that will aid in managing operational risks in an organization. It is worth mentioning that these strategies need to match the organization’s culture, processes, structure among other important factors crucial to the firm. There are several gains connected to having a detailed operational risk management plan. The main purpose of this article is to list the major advantages of operational risk management, take a look at these benefits on this post.

The number one benefit of operational risk management is that aids in stopping cyber-crimes. Cyber-crimes are risks to an organization and can be prevented by improving on the security software that will help in reducing such activities by unauthorized third parties to the firm's systems. The next gain that an organization is sure to reap from operational risk management is ensuring that the firm adhering to set regulatory procedures and protocols that govern the industry that the organization is operating. Failure to follow the laid-down guidelines attracts a substantial amount of money in form of fines and can also cause the organization’s license or permit to be revoked. Operational risk management is significant as it helps the company to spread as well as transfer risks that they are not able to mitigate. Operational risk management first ensures that the management has identified the specific risk, established its nature and size, and how it will affect the operations of the company. The organization will be in a better position to negotiate for fair insurance policy coverage that will take up the risks for the company.

Another importance of operational risk management is that it assists all managers from the top-level managers to low-level managers to make informed and smart decisions. Decisions made in the organization are informed operational risk management takes time to understand the kind of risks that the firm faces and the possible alternatives to mitigate, avoid, or accept the risk. Besides, the operational risk management weighs to see that the returns that will be expected from for example the introduction of a new product line will be more than the cost of production. Therefore, achieving the wealth maximization goal of shareholders of the organization. The relationship between customers and the organization is crucial and should be looked into keenly. Operational risk management ensures that nothing gets into the way of this relationship and ensures that customers continue to bring satisfaction while trying to do away with any risk that may hinder the relationship. Knowledge is power and so you would like to top up what you have learned in this article at

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