Which method is central to identifying risks in the ORM process?

The fundamental method for identifying risks in the Operational Risk Management (ORM) process is hazard identification. This process involves systematically recognizing and understanding potential hazards that could lead to operational risks. It serves as the foundational step in developing a comprehensive risk management strategy, as it enables organizations to pinpoint specific threats and vulnerabilities within their operations.

Hazard identification involves various techniques, such as brainstorming, checklists, and expert interviews, to gather information on what might go wrong in operational processes. By clearly identifying these hazards, organizations can move on to assess risk levels, implement controls, and develop mitigation strategies, ensuring that they address the most significant threats to their operations.

While forecasting, risk reporting, and data analysis are important components of the ORM process, they primarily serve as tools for assessing, communicating, and measuring risks rather than directly identifying them. In essence, without effective hazard identification, the subsequent steps in the ORM process would lack the necessary foundation to be effective.