22 October 2003

Operational Risk Management: A Leadership Message

by Peter L. Higgins
Managing Director
1SecureAudit LLC

The leader "self-talk" in all of us says that we can't do it all. We realize that the only way to make it all happen everyday is through your people, everyday that self-talk is reinforced. Until someone or some thing fails you.

The anticipation that change is going to bring us continued chaos is the key to really understanding what operational risk management is all about. The leaders who have taught their teams to understand that "chaos" is just around the next corner are the leaders whose mission will succeed.

The Operational Risk Management profession has long preached about the proactive mantra of being prepared. They realize that training, testing and planning is not a once a month or quarterly exercise. It is a daily if not hourly task that warrants the best decision making, the correct strategy and the acknowledgement that "Risk" is never totally defeated.

The anticipation that change is going to bring us continued technological advancement is the next key to really understanding what operational risk is all about. The leaders who realize that the threat of "technology" itself warrants an intensified strategy to protect and defend precious corporate assets are the ones who will survive.

A framework for operational risk is emerging, consisting of a set of integrated processes, tools and mitigation strategies. Yet leaders need to consistently support the efforts of the most effective weapon for managing operational risks. Planning and training with their employees, partners, suppliers and community.

Prepare for a new scenario that has not yet been identified. You can't predict when or what event in the next day will be a substantial threat to your well being. You can only prepare so that you have the edge no matter what the circumstances are. Get your people ready by training them and educating them on the most unlikely events. It is only then that you have started the awareness that is needed for your first layer or perimeter of defense.

Your investment in planning and training for your people is your duty. Invest in them and they will manage the inadequate or failed processes, other people, systems and external events that may bring you and your organization new and unexpected loss events.

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