All business have that point in time where hardships arise and disrupt the running of the business causing the business to shutdown. Challenges are also capable of triggering great losses. A good example is a data breach becoming the reason why a business shuts down , gets lawsuits and fines. A physical challenge such as pandemic can in a great way cause a business’s operations to be affected. These are risks that a business can take an initiative to mitigate by knowing how the risk they cause can affect their business. The risks are put in different categories. They include, operational, information, compliance as well as personnel. The purpose of operational risk management is seeking to reduce risks that come from fraud, both internal and external, as well as process management among the rest. Below are some of the advantages that result from operational risk management in businesses.
The initial benefit is that of mitigation of cyber attacks. Lately the occurrences of cyber attacks have risen greatly. The attackers are constantly coming up with new ways of improving and evolving the attacks that they execute. Cyber security is not accorded the importance that it deserves. Nevertheless, a single breach is capable of impacting a business in numerous ways. This is an operational risk that should be identified, well understood and the ways of mitigating it known. A great number of the cyber security breaches can be reduced by having the security protocol in place upgraded. Even though it can be costly to come up with such systems in the end reducing the cyber attack cases are going to pay off greatly.
The other advantages is that of better regulatory compliance. The expectation of customers governments and stakeholders keep adding. And this means that business have no choice but to comply with the regulations that are ever changing. This increases the level of business compliance because if they fail to comply there are loses to be made.
Non-compliance might come with legal consequences pertaining to fines, imprisonments, product seizures among many others. It can also have a reputational impact on the business that you have. With the help of operational risk management business are capable of identifying all the compliance requirements that they have and fulfilling them prior to them impacting the business.
To end with there is the benefit of better decision making that makes operational risk management even more important. A great number of business make end decision without gathering the necessary information pertaining to associated risks, alternatives and the consequences that will emanate from their decisions. in case such as this, the business owner will make up their mind based on how experienced they are, their assumptions and judgment they make.