Operational risk management (ORM) is a critical component of modern business strategy. It involves identifying, assessing and mitigating risks that could disrupt operations, affect safety or damage a company’s reputation. By proactively addressing these challenges, businesses can ensure continuity, protect employees and ultimately enhance their bottom line.
In this blog, we’ll explore the importance of ORM, the core components of operational risk management, and how OCCU-TEC’s Managed Environmental, Safety and Health (MESH) services can support ORM effectively.
What Is Operational Risk Management?
ORM refers to the process of identifying, assessing and mitigating risks that could disrupt a company’s operations. These risks range from safety hazards and compliance failures to environmental impacts and unforeseen disruptions.
Why Is ORM Important?
Operational risks are inevitable, but proactive management minimizes their impact. For example, unaddressed safety hazards can lead to workplace injuries, regulatory fines or reputational harm. ORM ensures businesses remain resilient, adaptable and prepared for the unexpected.
Common Operational Risks:
Another example of ORM is cybersecurity. As businesses rely more on technology and data in their operations, cyber threats such as data breaches, ransomware attacks and phishing campaigns can disrupt workflows, compromise sensitive information and damage reputations.
Recent data emphasizes these concerns. A study by the Operational Risk Exchange (ORX) revealed that 89% of financial institutions identified cybercrime as one of their top operational risks in 2023, while supply chain disruptions remain more than twice as high as pre-pandemic levels, according to the Business Continuity Institute (BCI). The same ORX study highlighted that business service disruptions are a significant concern, reflecting the increased likelihood of simultaneous disruptions.
Core Components of Effective ORM
Successful ORM involves a structured approach to managing risks. Here are the key components:
Risk Identification and Assessment
Understanding potential risks is the foundation of ORM. This involves:
- Conducting audits to identify workplace hazards.
- Reviewing existing programs and procedures for OSHA and EPA compliance.
- Assessing the likelihood and impact of risks and monitoring existing work practices for safe operations.
- Prioritizing risks based on their severity.
- Reviewing production processes for environmental compliance.
Control Measures and Monitoring
Once risks are identified, businesses must implement measures to control them. These include:
- Developing safety protocols, environmental permitting and emergency plans.
- Training employees on risk mitigation strategies.
- Regularly monitoring and reviewing risk controls to ensure effectiveness.
Continuous Improvement Strategies
ORM is not a one-time effort. It requires ongoing evaluation and adaptation. Businesses should:
- Regularly update safety policies based on new risks or regulations.
- Invest in technology and tools for better risk management.
- Foster a culture of safety and accountability among employees.
Notably, the Disaster Recovery Journal’s 2023 survey found that 96% of organizations reported executive sponsorship for business continuity management (BCM), reflecting leadership’s growing role in risk management efforts.
How MESH Services Enhance ORM
OCCU-TEC’s MESH services play a vital role in strengthening operational risk management. Here’s how:
- Integration of Safety, Health and Environmental Management: MESH services take a holistic approach to ORM by combining environmental compliance, workplace safety and health assessment. This integrated strategy ensures that businesses address all aspects of operational risks
- Tools and Strategies Provided by OCCU-TEC could include:
- Customized Audits: OCCU-TEC conducts thorough assessments tailored to each client’s industry and operational needs.
- Proactive Training Programs: Employees are equipped with the knowledge and skills to identify and mitigate risks effectively.
- Real-Time Monitoring: Advanced tools and technologies help businesses track risks and ensure compliance in real time.
- Tailored Solutions for Complex Risks: OCCU-TEC understands that every business is unique. Our MESH services are designed to address industry-specific challenges, whether it’s managing hazardous waste in manufacturing or ensuring fall protection in construction.
Business Benefits of ORM
Implementing effective ORM strategies offers significant advantages:
Operational risk management is no longer optional. It’s a necessity for ensuring safety, compliance and resilience. OCCU-TEC’s MESH, or Managed Environmental, Safety and Health, services provide the expertise and tools businesses need to implement effective ORM strategies, address risks proactively and achieve long-term success.
Don’t wait for risks to become problems. Contact OCCU-TEC today to learn how MESH services can help your business thrive.