Impact of digital money and operational resilience on ORM processes and people

Patrick McConnell

Chapter 10 discusses the impact of digital money and the new emphasis on operational resilience on ORM processes and people, especially the skills needed to implement these innovations. First, the chapter considers what operational risk managers do today – ie, the roles they play in a typical financial organisation – and identifies some of the skills gaps that must be filled to come to grips with the operational resilience agenda. The chapter then identifies the new skills that will be needed and have to be acquired by firms to operate effectively in this new, complex, ever-changing environment.

WHAT OPERATIONAL RISK MANAGERS DO

In its revised principles for the sound management of operational risk, the BCBS (2021a) highlights the importance of ORM functions and the ORM framework:

Banks should ensure that each line of defence:

1. is adequately resourced in terms of budget, tools and staff;

2. has clearly defined roles and responsibilities;

3. is continuously and adequately trained;

4. promotes a sound risk management culture across the organisation; and

5. communicates with the other lines of defence to reinforce the ORMF.

As mentioned in Chapter 8, the responsibilities of an effective second line of