Benefits of good risk management

There are many benefits to be gained from a good operational risk management programme. These include:

·         Keeping the senior management and Board members out of jail;

·         Being able to continue to hold an operating licence in a regulated industry (such as civil aviation, pharmaceuticals, banking or insurance);

·         Avoiding fines for corporate non-compliance with regulations and legislation;

·         Cost reduction through reduced operational losses and improved efficiency of operational business processes;

·         Reduced requirements for both regulatory and economic capital allocation;

·         Improved shareholder value and confidence, which is especially valuable in times of crisis when shareholder trust is stressed to its maximum limits;

·         Better measures of true business performance through the use of risk-adjusted key performance indicators (KPIs);

·         Competitive advantage through improved decision support and market intelligence based upon more accurate risk-adjusted management information;

·         More reliable forecasting for new business plans, again based upon more accurate risk-adjusted management information;

·         Improved relationships with industry regulators.