The term Operational Risk Management (ORM) is not new. It has been tossed about in businesses across North America for the last several years. ORM and the oft associated term Enterprise Risk Management (ERM) have generally been used as corporate buzzwords, business culture idioms referenced in board meetings and articulated during presentations. Recent developments, such as the creation of the Sarbanes-Oxley (SOX) Act in 2002 in response to growing financial scandals in the U.S., have brought Operational Risk Management, Enterprise Risk Management and related concepts from the backrooms to the forefront of corporate America.
The inescapable reality is that every single day businesses incur losses and experience operational disruptions due to failures by employees, incorrect implementation of processes and technologies as well as wilful disobedience to internal controls. These losses may be manifest in the form of uncollectible receivables from disappointed clients, lost sales due to call centre failures or unproductive employee downtime when computer systems are unavailable, or a host of other potential problems. While most businesses have developed ad hoc methods of dealing with such losses in the past, legislation (such as SOX and the Basel Accord) has made standardized compliance procedures much more complex. Thankfully, just as these new rules have given rise to increased awareness of ORM/ERM, new tools (including Risk Management software) have been developed to aid compliance efforts.
The new regime of Sarbanes-Oxley, under the direction of the Public Company Accounting Oversight Board (PCAOB) which is in turn accountable to the Security and Exchange Commission (SEC), has undoubtedly benefited the business world by providing a foundation from which to decrease corporate fraud. However, the complexity and associated technical, labour and administrative costs posed to business is also considerable. The realities of both individually large and collectively mundane errors resulting in loss, as well as the newly regulated reporting of those losses, affect virtually all areas of every business each and every day. Therefore, it is in each company’s best interest to simultaneously find ways to cut losses while keeping regulatory compliance costs down. Hence the rebirth of Operational Risk Management/Enterprise Risk Management and the new demand for Risk Management software solutions.
Traditionally, few operational losses were measured in any accounting system, and rarely were the loss incidents tracked and analyzed in any way; the time and paperwork required to do so was simply daunting. Because there was no standard legislation in place, any Risk Management software tools were often proprietary and slightly more than electronic log books at best. New technologies and attitudes have allowed loss incidents to be seen as more predictable and able to be grouped into risk categories. Proper analysis of these incidents can result in attribution to root causes which aids in mitigation. Even this beginning leads to dramatically reduced costs while achieving huge gains and strategic advantages from well crafted Operational Risk Management policies and Enterprise Risk Management procedures.
Changes in legislation, technology and attitudes related to ORM/ERM have produced not just economic gains, they have led directly to re-invigorated business innovation and even created improvements in the quality of life. For example, safety, quality and environmental related loss incidents have proven to be not only manageable and avoidable, but sound management of these issues has conferred greater advantage on those who succeeded while driving many who did not adapt out of business. While large scale corruption may have brought about regulatory changes, these changes have spurred a re-visioning of Enterprise Risk Management. Advanced Risk Management software has allowed business to more directly mitigate losses. This has resulted in a cleaner, more efficient and more competitive business environment.
In the post-SOX environment, the same social and political pressures on organizations are present. Improved attitudes and tools have encouraged the proliferation of sound Operational Risk Management to the economic and strategic benefit of those properly prepared for the journey. To find out how Paisley Consulting can help your company on that journey, whether through the provision of powerful Risk Management software or expert consultation on Enterprise Risk Management, visit www.paisleyconsulting.com.
By: Joe Armstrong
Posts Tagged ‘Last Several Years’
5 Tips to Improve Your Environmental Non-profit Organization
September 5th, 2009Non-profit groups come in quite a few stripes. Take, for example, environmental advocacy. It encompasses both safeguarding the public from environmental threats and securing our natural resources.
As with all advocacy groups, there is an increasing recognition that future success will be tied to improving use technology and best practices.
Managing a firm focused on environmental issues can be extremely challenging. Persistent lack of resource means that many organizations rely on part-time or volunteer team members. Yet, there are a number of best practices and tools that can help such organizations address these challenges.
1. Increase collaboration
California alone has hundreds if not thousands of environmental advocacy groups. And in the last several years, there has been increasing levels of collaboration between environmental advocacy groups across states.
One driver of this pattern may be lower cost airfares, a trend that is now intensifying as fuel costs continue to drop. Another driver is the expansion of communications resources.
This trend can clearly be seen in the growing adoption of conference calling services that provide teleconferencing solutions to such organizations. Many such conferencing services are now offer free conference calling which has further increased the feasibility of collaboration without expensive travel required.
2. Use networking tools
The most successfully managed advocacy groups generate networks of supporters. These networks can take years to build. Whereas the conference calling tools described above are facilitating teleconferencing and collaboration, the new networking tools are facilitating an ongoing sense of feeling connected. Web based resources for networking have now become ubiquitous.
The trick is realizing that online networking is about more than creating a profile. It is about using the whole range of tools including automated updates, blogs, bulletin boards, and photo sharing. These networking tools also help members share the emotional support which is so crucial to sustaining enthusiasm.
3. Remain focused
The best managed environmental groups are ones that stay clearly focused on their mission and do not allow themselves to become distracted. Many environmental advocacy groups are resource constrained. For that reason, committing to five goals with total effort will generally yield superior results compared to tackling ten goals, with one tenth the effort for each goal.
4. Use Desktop Sharing
Some advocacy groups have far flung leadership teams, and it is difficult to have face-to-face meetings. Conferencing can only achieve so much. People often say they want the visual connection. Video conferencing has still not yet seen wide adoption but video conferencing is not the only way to generate a visual connection. Another solution is to use a desktop sharing system
Whether it’s broadcasting a PowerPoint document showing the group’s development efforts or a spreadsheet showing volunteer recruitment stats, desktop sharing can effectively bridge the gap of time and space.
5. Leveraging academic resources
Some people believe that academia is too far removed from environmental politics to be useful. However, many campus programs now offer training in environmental stewardship, policy or advocacy. Such programs are building blocks in the preparation of future leaders and grassroots organizers.
Students who are enrolled in these courses are good candidates to volunteer or lead efforts for your organization. Another effective approach is involving faculty or staff members who can provide perspective and advice. Students come and go but faculty generally remain.
The ideas are not expensive to carry out. Whether its better use of networking tools, free conference calling systems or desktop sharing, the cost of these resources is generally minimal in comparison with the expected benefit.
By: Andy Denis
