The Business Value of ORM

Ariane Chapelle

Risk managers, as the Cambridge neuroscientist John Coates once put it, “always rain on someone’s parade”. Getting accepted, never mind liked, by the business is not an easy task. Also, operational risk management activities such as filling in an incident reporting database or completing a risk and control self-assessment can be daunting to anyone, especially the business, who are far from sharing the risk function’s interests.

If demonstrating value is necessary for buy-in, correspondingly business acceptance of operational risk management enhances its value significantly. We need to break this cycle at least once in order to turn it into a virtuous circle, where as value is demonstrated, risk managers get accepted and risk management improves, generating still more value and so on.

A BUSINESS CASE FOR RISK MANAGEMENT

I often argue to my students and clients that it is optimistic at best and mostly unrealistic to try advocating to the business the value of risk management without any numerical evidence. You wouldn’t ask for investments into a new product line or a new system without a business plan, would you? Resources and investments in risk management should follow the