Today, businesses across all industries encounter various types of risks such as operational and financial risks. These risks, if not managed properly, can impact the organization’s bottom line. To carry out a risk analysis, businesses will need to analyze possible threats that they could face and prioritize them based on their severity for the organization. Operational risk analysis helps businesses to identify and manage operational threats that could undermine key business initiatives. To help you out, our experts have listed out steps of operational risks analysis and their benefits.
Steps of Operational Risk Analysis
Risk identification – The initial phase of the operational risk analysis process involves risk identification. In this phase, businesses will need to identify all the risks that might impact the organization’s operations or its outcome. A SWOT analysis process can help businesses in this phase of the operational risk analysis process.
Analyzing the risks – The next step after risk identification involves determining the likelihood and consequence of different risks in the market. Here, businesses must also develop an understanding of the nature of the risk and its potential to impact the operations of the organization.
Risk prioritization – In this phase of the operational risk analysis process, businesses must determine the risk magnitude, by analyzing the likelihood and their consequences. Also, businesses must categorize them based on their severity.
Take operational risk management solutions and approaches – In this step, businesses must assess the highest ranked risks and take proactive approaches to tackle them.
Benefits of Operational Risk Analysis
#1: Identify security vulnerabilities
Operational risk analysis helps to evaluate external and internal threats within an organization. Also, it will identify current security vulnerabilities, inefficiencies, and non-compliances with standards for security policies. By identifying security vulnerabilities in advance, businesses can stay take proactive measures to prevent them before they impact the organization’s operation. Moreover, it can prevent businesses from making a costly decision that would result in huge losses.
#2: Prevents security breaches
These days, security breaches are common in all industries. In the case of online businesses such as e-commerce, leveraging operational risk analysis can help businesses to take preventive approaches to ensure the safety of customers’ personal details. Alternatively, in the case of a brick and mortar store, operational risk analysis can help businesses to take proactive measures to tackle market challenges.
#3: Plan for future success
With supply chains, financial markets, and trade functions getting linked to each other, identification and mitigation of operational risks becomes inevitable for businesses to plan for future success. Early identification of operational threats can help businesses to improve the effectiveness of the risk management operations, strengthen the decision-making process, and reduce potential damage from future risks. Additionally, leveraging operational risks analysis solutions helps businesses to improve the reliability of business operations and better plan for the future.