What is the primary focus of Operational Risk Management (ORM)?

The primary focus of Operational Risk Management (ORM) is to identify, assess, monitor, and mitigate operational risks. This comprehensive approach encompasses various aspects of an organization’s operations, including processes, systems, and human factors, to ensure that risks that could impede operations or result in losses are effectively managed.

ORM involves a proactive strategy where organizations work to uncover potential risks before they manifest into issues. This includes not only recognizing risks but also evaluating their potential impact and likelihood, thus enabling better decision-making and resource allocation to address those risks. Monitoring is an ongoing process that helps ensure that identified risks remain within acceptable limits and that the strategies in place to manage these risks are effective.

By focusing on mitigation, ORM helps organizations to lessen the potential negative effects on objectives, which is essential for maintaining operational integrity and achieving strategic goals. This holistic view contrasts sharply with other options that might focus solely on financial aspects, cost reduction, or market expansion, which are only parts of a broader operational context and do not encompass the holistic view that ORM aims for.