Five Tips to Sense Operational Risks in Your Organization

Alan, the company’s CEO is concerned about the risks of an upcoming new project. Alan has always been proactive with risk management and hence calls a meeting with his Risk Manager, Jack and Head of Operations, Sarah.

Jack is a witty risk manager and he comes up with some techniques that could help Sarah deal with risk identification in an effective manner.

Five Tips to Sense Operational Risks in Your Organization

careweb-operational risk management software solutions

careweb-operational risk management software solutions

We know that human factors, processes, system flaws and external events lead to operational risks. However, unlike market, strategic and financial risks, 95% of operational risks lie within an organization. Moreover, they can be mitigated/controlled with effective risk management.

Operational risks can be initiated just by a single incident at a particular time or a series of events. The first step in identifying those risks is to engage your employees.

Are your employees engaged?

Don’t make the mistake of believing that a dictatorial management and an unquestioning workforce make for an ideal workplace. Instead, it is necessary to have frequent two-way interactions with your employees. Sometimes risks occur simply because they are not addressed by anyone.

Employees are the direct links to business operations. Basically, they make the work happen and are the first ones to realize if something goes wrong or can be executed in a better way.

So give your employees ample space to openly address issues and freely state their suggestions.

What is management up to?

Again, don’t be under the misconception that flaws occur only from subordinate workers or inexperienced employees. There are ample examples from the business world where managements have failed to lead the company.

Top-level executives have a stressful job to handle, mainly as decision makers, strategy proposers and supervisors. Hence, it is advisable to ensure that every aspect is reviewed by experts, analysts and employees before implementation.

Don’t forget to run a check on the consequences of the management’s actions using the company’s (Operational Risk Management) ORM software!

Do your employees have “the necessary skills”?

Subject experience or competence is the qualification that you should look for when you choose to hire your employees. And if it is a pilot program, it is recommended to equip your team with different skill-sets.

In case you have a team that lacks proficiency, ensure that they are trained for their specific roles. A balanced combination of individual strength and teamwork is the mantra that works infallibly.

Is there an efficient channel of communication?

The scope of miscommunication is predominant in a corporate environment.

Misunderstood or incomplete information spreads ambiguity and invariably affects execution of company plans. This often creates problems between teams and employees.

Accurate communication has to be established and one-on-one communication has to be promoted between different teams.

Have you been paying attention to your employees?

Technical problems are as common as communication errors.

The best way to identify system errors is to watch out for feedbacks from employees. Have there been reports, complaints or even trivial discussions on system errors? Timely resolution of system errors is essential.

When every complex aspect of operations is made simple through technology and automation, diligent monitoring must be maintained as errors in highly automated processes can be left unnoticed without adequate supervision. It is advisable to have permanent IT support to take care of regular check-ups for malfunctions and slips in the tools used.


Five Tips to Sense Operational Risks in Your Organization was last modified: November 3rd, 2014 by Mohammed Nasser Barakat
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Mohammed Nasser Barakat

Partner at CAREWeb
(Mohammed Nasser) Barakat, is the BRS Service Line Leader for the ME region. Nasser has an MBA in Professional Accounting and a BS Degree in Banking and Finance.He is a Certified Public Accountant in Colorado State, USA, a Certified Control Self Assessment Practitioner and a Certified Fraud Examiner. Find me on