What is the role of the board in ORM?

The board plays a pivotal role in Operational Risk Management (ORM) by providing oversight for the organization’s risk management framework and ensuring that it aligns with the overall business strategy. This involves establishing risk tolerance levels, setting risk management policies, and embedding a risk-conscious culture throughout the organization. By maintaining this oversight, the board ensures that operational risks are identified, assessed, and managed effectively, which is crucial for the organization’s long-term success.

In addition, the board is responsible for receiving regular reports on risk management processes and outcomes, allowing for informed decision-making and guiding corrective actions when necessary. This strategic level of involvement is critical as it helps in integrating ORM into the fabric of the organization, thereby reinforcing its importance and ensuring that risks are considered in all business decisions.

The other options do not accurately describe the board's role. Daily risk management tasks and operational decisions are typically the domain of management and operational teams rather than the board. Exclusively focusing on financial performance also undermines the comprehensive oversight role of the board, as effective ORM encompasses much more than just financial aspects; it includes reputational risks, compliance issues, and operational effectiveness, among others. Therefore, the board's broader strategic oversight is essential for effective ORM.