Operational Risk Management is a continual process; the Operational Risk Management cycle includes assessment of risk, risk decision making and risk control implementation resulting in the acceptance, mitigation or risk avoidance. The Operation risk Management takes into account the risk of losses due to inadequate or failed systems and processes, human errors or other external events.
When the benefits outweigh the cost, risks can be accepted; unnecessary risks should be avoided; Risks should be anticipated and managed; Take right decision at the right levels. These are the principles of good Operational Risk management as per the U.S department of defense. There are three levels of operational risk management. Before a project is implemented in depth risk management is used as there will lots of time to plan and make preparations until the project is started. It includes drafting the requirements and the instruction and acquiring the required equipments. The deliberate risk management is one of the levels of Operational risk managements and is done at regular intervals through the project implementation. It includes occasional safety checks, drills, on job training etc.
During operational exercises, the available resources need to be used efficiently by the crew to accomplish the mission when time and resources are limited and making use of the risk management techniques for achieving the same is known as Time critical operational risk management.
Some of the benefits of operational risk management are: Reducing the operation loss; Lower auditing and compliance costs; Detection of unlawful activities early; Reducing the exposure to risks in the future. Many software development companies are into development of risk management software packages for enterprises after the implementation of Sarbanes-Oxley Act post Enron incident. The risk management software also lowers the cost of financial audit. There are around 115 governance, risk & compliance vendors who take care of the operational management projects listed by the Forrester Research.