An Operational Risk Management Framework (ORMF) is a cohesive strategy that an organization implements to manage its existing and potential risks. The goals of an ORMF are to identify, assess, monitor, and report on a risk landscape and should be tailored appropriately to each risk management practice. The ORMF is intended to be a living, changing framework embedded within an organization: as newly identified risks emerge they are assessed, and a monitoring protocol and reporting mechanisms are put in place to manage them.
Modern risk managers juggle an abundance of data sources that comprise parts of an ORMF. From claims systems to incident management systems to insurance renewal systems, those tasked with risk management often have to hop from system to system to do their jobs, making it challenging to harness their data and compile a comprehensive overview of their risk management practice. Risk management tools aren’t as powerful in isolation as they are when combined, and an ORMF is an integrated answer to a disparate software landscape.
OPERATIONAL RISK MANAGEMENT SYSTEMS exist to connect all aspects of risk management across data silos and to adapt to the intricate challenges of contemporary business and risk environments. An ORMF can connect multiple disparate systems to help those who oversee risk management harness their disjoined data.
Holistic Connection Across Data Silos
The core strength of an operational risk management system is its ability to get the best information out of all your data sources and create a holistic view of your risk management landscape. This interconnected risk management framework ensures a comprehensive synthesis of operational risks by automating the aggregation of data from diverse systems and sources. By bridging the gaps between risk, insurance, and Environment, Health, and Safety (EHS) data, an operational risk management framework acts as a unifying force across your digital systems, simplifying risk governance and helping users effectively leverage their data.
Proactive Incident Management
Risk management exists to handle incidents, and a powerful operational risk management system takes incident management to a new level. Beyond basic incident capture, the operational risk management framework establishes a systematic process for incident notification, escalation to management, and overall incident response. It also comprehensively centralizes data related to the incident for later use, empowering thorough and meticulous investigations, the identification of root causes, and the foundation for highly effective corrective measures within your organization’s budget.
Centralized Claims Management
Efficiency is the goal of an operational risk management system, and a centralized claims management system is a key component that informs other systems within the framework. By centering claims management with other data stacks, an operational risk management system creates automation by seamlessly consolidating data from Third-Party Administrators (TPAs) and insurers, thereby reducing reporting costs and providing a cost-effective solution for streamlined claims reporting and management.
Exposures and Asset Management
Exposure and asset management are critical to an operational risk management framework for organizations with physical assets, but monitoring and planning for their protection can be a heavy lift. Asset management records can be very extensive and span properties, providing intricate details on location, usage, values, and COPE (Construction, Occupancy, Protection, Exposure) details. An operational risk management system enables quick, integrated access to asset documentation, enabling informed decision-making and strategic risk management.
Insurance Data Centralization
An operational risk management system takes a comprehensive approach to extremely complex insurance data, handling each aspect of the insurance lifecycle. From renewals and cost allocations to premium allocations, limits, and conditions, the framework ensures clean handling of every facet of insurance-related information. By bumping other internal system data against intricate insurance data, insurance management becomes a strategic asset that informs decision-making and improves overall risk management strategy and costs.
ERM Tool Alignment
By harmonizing with Enterprise Risk Management (ERM) tools, an operational risk management system integrates an ERM’s identification, assessments, controls, and actions within a cohesive enterprise framework. By working with your ERM, an operational risk management framework facilitates clean consolidation, data aggregation, dataset linkage, and reporting opportunities, unlocking the full potential of the operational risk management tool and surfacing valuable insights.
Integrated Safety Management
Safety is not merely a checkbox, but a fundamental aspect of the design of an operational risk management system. An operational risk management framework incorporates safety management against its other data sets, capturing incidents, near misses, observations, and more. With cohesive access to safety incidents, thorough investigations, and root cause analyses–the implementation of corrective actions is easier than ever before. By targeting loss control measures, driving best practices, and ensuring compliance with local legislation such as OSHA and RIDDOR, an operation risk management system fosters a culture of safety and prevention within an organization.
Operational risk management systems are more than just a stack of integrated software, they are a strategic must to handle the contemporary risk management landscape business landscape. By offering a comprehensive, interconnected framework, an operational risk management system empowers organizations not only to navigate challenges and streamline processes, but to foster a culture of safety and risk mitigation. As businesses continue to manage complex risk, the capabilities embedded in an operational risk management framework will continue to be a requirement for sustainable success in the face of evolving risks and uncertainties.
To get started with an operational risk management framework, chat with an expert to see how Ventiv’s operational management system is right for your organization.
