The human factor in operational risk management

Abstract

Since the conception of operational risk management and the need for regulators to calculate and require adequate levels of capital, this discipline has developed and matured, supported by an ever-growing amount of data, techniques and taxonomies. This paper seeks to escape from the complex technical aspects of the discipline for just a moment, and to refocus on the human factors and their limitations when designing and applying an operational risk management framework in the first place. Consequently, this is a personal and perhaps somewhat philosophical view on how an operational risk management framework could be infused with a more explicit and uniquely human perspective, to embed the technical aspects of the discipline in a broader sense of purpose and meaning. More than merely pondering, the paper concludes with some initial recommendations on how to follow through and to apply the consequences of these thoughts onto an operational risk management framework.