Managing operational risk in a changing environment

Abstract

This paper addresses the current issues and challenges involved with the management of operational risk where the risk is introduced through changes within the operating environment. The focus is on defining changes that require management attention and a discussion of organisational issues and considerations that need to be taken into account when designing an effective approach. While the approach to managing operational risk will vary between organisations, this paper relies on regulatory guidance provided primarily from the USA, but which is broadly applicable regardless of regulatory jurisdiction. The paper attempts to present a balanced, common-sense approach that is applicable to a broad audience, taking the reader through the basic building blocks, from defining what changes are taken into consideration, focusing on risk level, through ensuring that an appropriate review and mechanism is in place, to having clearly defined roles and responsibilities.