Operational Risk in the global economy is migrating to places that 10 years ago would not have been easily forecasted. New countries, financial institutions and software technologies have changed the playing field for risk management executives.
Why is this happening? One example is the movement of employment to more emerging markets where corporate tax rates are lower and the supply of talented workers with specific skill sets is prevalent. The simple movement of people and systems to those new countries creates new found risks that may not have been as pervasive in the past for the institution.
Another example is the evolution of new computing platform paradigms such as the emergence of "The Cloud" or "Infrastructure-as-a-Service". This outsourced IT model not only provides economy of scale in terms of just in time computing power but also the more economical licensing models for primary office automation Apps such as word processing, spreadsheets, presentations and simple databases.
Operational Risk within the confines of the global workplace will continue to follow where these people and the systems are operating from. Along with this migration of responsibilities of vital corporate processes to other cultures and countries comes the risks associated with potential lack of safeguards both legally and to the physical protection of key corporate assets.
In the United States, The "ABC's of the International Economy" explains why there are 22 million employees now working for US-based corporations outside the country. One may have heard the phrase "Follow The Money" in several contexts in the past. Whether it was Watergate investigations in the 70's or the new war on terror the tracking of where money flows can be a real indicator of where operational risk managers need to keep their radar focused and on high alert. Keep your eye on firms like The Carlyle Group:
Carlyle was one of the first to China and now is headed to sub-Saharan Africa in the face of a evolving political and legal climate. Soon after security is established, the capitalists will arrive and commerce will take on a whole new perspective. Infrastructure will soon follow and the playing field is set for the global economy to engage in the development of new markets and new opportunities.
Operational Risk Management in the next ten years will take on a whole new meaning than it does today. Fueled by the likes of places such as the DIFC the risks associated with people, processes, systems and external events will become exponential.