24 April 2011

Operational Risk Management: Discipline and Professional Development...

You know that the discipline of Operational Risk Management has gained ground in the minds of global executives and Board of Directors when you see growth in organizations that focus on the professional education and standards of conduct of practitioners. The Institute of Operational Risk is one such entity:

The Institute of Operational Risk (IOR) is a professional body, existing to serve its members. It was formed to provide professional recognition and to enable members to maintain competency in the discipline of operational risk.

The Institute, as reflects the industry, is relatively new but has a drive and passion in regard to Operational Risk in developing standards and education, also providing a forum to exchange ideas and best practice within the industry.

The stated mission of the Institute is to promote the development and discipline of Operational Risk and to foster and maintain investigations and research into the best means and methods of developing and applying the discipline and to encourage, increase, disseminate and promote knowledge, education and training and the exchange of information and ideas.

The discipline has now spanned several primary critical infrastructure sectors of the global economy including Energy, Financial Services, Information Technology and Defense Industrial Base. Major organizations such as British Petroleum (BP) have found the promotion of new Operational Risk capabilities to be a prudent strategy as it operates after a Gulf of Mexico Macondo Blowout in other parts of the planet where deep water drilling is still a vital solution.

Goldman Sachs, AIG and the other band of brothers in the global financial crisis of the past few years have reinvested in more prudent Operational Risk Management strategies. The books that have been written outlining the "Do's and Don'ts" of people taking on derivatives of one type or another to hedge the marketplace are prolific. The Meredith Whitney's and Steve Eisman's with their crystal balls on wall street are now infamous.

IBM, Google, Apple and Cisco have capitalized on Operational Risk Management and its focus on business continuity planning, continuity of operations and the facilitation of utilizing cloud computing to enhance the resilience factor of systems. The pervasive growth of people however utilizing social networking in the workplace has created its own set of OPS Risk challenges. Spear phishing, targeted fraud schemes and sophisticated software exploits can be attributed in many cases to the plethora of personal information the criminals have to work with. Social engineering, economic espionage and other transnational criminal activities are continually perpetuated by the security and privacy failures of the IT industry.

The Defense Industrial Base including the US Navy, US Marine, US Air Force and Coast Guard know the value of effective Operational Risk Management. The discipline is a core aspect of their cultures and is continuously tested and measured on a daily basis. On the flight line or on the base these branches of the military use OPS Risk to save lives and protect valuable assets worth millions of dollars every day.

As the Institute of Operational Risk opens it's chapters across the globe, one can only wait and see how it will impact the discipline of the practitioners themselves. We trust that they will continue their own quest for expanding the portfolio of thinking and to see that the right people are at the table to assist in its direction and success.