Allocate Resources isn't a standalone step in ORM, here's why.

Which of the following is NOT a step in the ORM process?

• A. Identify Hazards
• B. Implement Controls
• C. Allocate Resources
• D. Assess Hazards

Answer: (C)

The ORM (Operational Risk Management) process typically involves a structured approach to identifying, assessing, and mitigating risks. The steps include identifying hazards, assessing those hazards to understand the level of risk they pose, and implementing appropriate controls to manage these risks effectively. Allocating resources, while important for effective risk management, is not explicitly categorized as a step in the ORM process. Instead, it is often considered a supportive action that ensures that the necessary tools, personnel, and budget are available to implement the controls that have been identified. The focus of the primary steps is on the identification and management of risks rather than the allocation of resources. In summary, the steps in ORM primarily include identifying hazards, assessing hazards, and implementing controls to mitigate those hazards, making the concept of resource allocation a secondary but necessary condition for successful implementation rather than a distinct step in the process.

Operational Risk Management (ORM) isn’t a mystery kept behind a whiteboard. It’s a practical, three-part rhythm many teams use to keep everyday operations safe and predictable: identify what could go wrong, size up how bad it could be, and put controls in place to keep risk in check. Think of it as a playbook for staying steady when the pressure’s on—whether you’re running a manufacturing line, a logistics hub, or a team delivering critical services.

Hazards first: spotting what could go wrong

Let’s start with the heart of ORM: identifying hazards. This isn’t some lofty theoretical exercise. It’s about looking around your environment and asking simple questions: What could cause harm? What could fail? Where might people be exposed to risk, and in what state is the operation when things go off the rails?

In practice, you’ll gather input from different angles—observations on the shop floor, incident logs, near-misses, maintenance reports, and even the quiet, everyday frustration voices that hint at lurking hazards. Some teams use checklists, others lean on brainstorming sessions with cross-functional folks who know the workflow inside out. It’s not about listing every tiny nuisance; it’s about capturing a realistic snapshot of what could derail the operation.

Hazards aren’t just physical. They can be process gaps, faulty data, or even miscommunication that leads to a wrong step. The trick is to keep it concrete: tie hazards to actual tasks, equipment, or environments. If you can point to a specific activity and name the risk, you’re on track.

Assess hazards: what’s the real risk here?

Identifying hazards is step one; the next move is to understand the risk they pose. This is where probability meets consequence. You’ll evaluate how likely it is that a hazard will cause harm and how severe that harm could be if it happens. The language here often gets technical—risk matrices, likelihood scales, and severity tiers—but the goal remains human: to understand which risks matter most so you can act on them.

A useful way to approach this is to separate inherent risk from residual risk. Inherent risk is the risk you face before controls are applied—the baseline. Residual risk is the risk that remains after you’ve put measures in place. This distinction helps teams decide if their controls are doing enough, or if the risk is drifting back because something wasn’t fully addressed.

You don’t need to become a math whiz to do this well. A simple grid on paper or in a lightweight software tool often makes the pattern clear: high likelihood with high consequence is a red flag; low likelihood with minor consequence is usually manageable. The real work is making the right calls under real-world constraints—time, budget, and human factors.

Implement controls: put parts in place to reduce risk

Once hazards are identified and ranked, the next move is to implement controls. These are the levers you pull to reduce the chance of harm or to lessen its impact. Controls can be technical, like redesigned equipment or guards; they can be procedural, such as new steps added to a workflow or clearer signposts and checklists; they can even be cultural, like enhanced communication norms or a shift in decision-making authority.

Think of the control set as a portfolio. Some options are engineered solutions that change how a process works; others are administrative—training, procedures, job aids—that boost awareness and discipline. Personal protective equipment is a common layer, but it’s often the last line of defense, not the first.

Controls should be practical and maintainable. It’s not enough to have a splendid diagram on the wall; you need something your team can use every day. That means considering maintenance, accessibility, and how the control fits with existing workflows. A control that feels like a burden won’t stick, even if it’s theoretically perfect.

Where does resource allocation fit in?

Here’s the nuance that trips people up if they think ORM is only about the three words—identify, assess, implement. Allocating resources is essential, but it isn’t a stand-alone step in the ORM sequence. It sits in the background, quietly keeping the machinery fed so the identified controls can exist in the real world.

Resource allocation includes budget, personnel, time, and tools. If you don’t have these, even the best controls won’t land. But the allocation itself isn’t a distinct ORM action like identifying a hazard or evaluating a risk. It’s the practical support that makes the risk controls possible to deploy and sustain.

In other words, ORM is about the risk-first thinking, while resource allocation is the necessary infrastructure that makes the risk-reduction plan actionable. It’s the difference between spotting a hazard and having the means to fix it.

A simple mental model: three steps, one loop

Some teams find it helpful to picture ORM as a simple loop: see, judge, act. You see hazards, you judge their risk, you act with controls. Then you revisit to see if the controls did their job, and you adjust as needed. It’s not a one-and-done process; it’s a living cycle that rides along with daily operations.

That loop benefits from small, fast feedback. After implementing a control, you monitor performance, collect data, and ask: Did risk drop as expected? If not, why not? Maybe the control needs tuning, or perhaps a different approach is warranted. The loop keeps maturity moving forward, not slipping back into old habits.

Digress a moment: culture matters

Here’s a quick digression that matters. ORM isn’t just about slides and matrices; it’s about how people talk about risk on the floor. A culture that welcomes near-misses, that doesn’t punish honest reporting, and that treats risk as everyone’s concern tends to spot hazards sooner and fix them faster. The best risk controls are born from teams that feel safe to flag concerns without fear of blame. That human element—how people communicate and collaborate—often makes the biggest difference between a plan that sits on a shelf and one that actually improves outcomes.

Common pitfalls worth avoiding

• Treating ORM as a checkbox exercise. When identifying hazards becomes a ritual rather than a thoughtful conversation, risks slip through the cracks.

• Overloading the risk matrix with vague terms. If probabilities and consequences aren’t defined clearly, you end up with a fuzzy picture and weak decisions.

• Installing a control that looks good on paper but disrupts the real work. If a solution makes the task harder or slower, people will push back and bypass it.

• Assuming resource allocation is a one-time event. It’s an ongoing support system; it needs adjustments as the operation evolves.

A practical look from the field

Imagine a warehouse that handles hundreds of pallets daily. The ORM process kicks off with hazard spotting: trip hazards in aisles, forklift blind spots, pallets stacked too high, and inconsistent labeling. The team then assesses these hazards, rating the risk by how often the hazard is encountered and how serious an incident would be. A forklift-related collision near a loading dock lands in the high-risk category, because it’s both likely in a busy moment and potentially catastrophic.

To address it, controls are introduced: redesigned traffic flow with clearly marked lanes, pallet stacking limits, a mandatory pre-shift briefing, and improved lighting. The team also introduces a quick check of lighting and signage before each shift—an administrative control that elevates situational awareness. Resource support isn’t flashy: a bit more time for pre-shift briefings, a small budget for better lighting, and a couple of safety roles to monitor compliance and feedback. The allocation exists to empower the controls, not to stand apart as a separate step.

As weeks go by, you measure the impact. Do near-misses go down? Are there fewer incidents when the dock is busy? Does the team report feeling safer? If the numbers rise again or if a new layout creates another snag, that’s your cue to adjust—the loop continues.

Putting it all together, with a clear take-away

• Identify hazards: start with concrete, task-related questions. Don’t chase every minor annoyance; focus on what could realistically cause harm.

• Assess hazards: rate risk in a way that makes sense for your operation. The aim is clarity, not complexity. Separate inherent risk from the risk that remains after controls.

• Implement controls: choose practical, maintainable measures that fit into daily work. Think in layers—from engineering to procedures to culture.

• Resource allocation: recognize it as essential support, not a formal step. Availability of budget, people, and tools makes the plan doable and sustainable.

• Keep the loop alive: watch, learn, adjust. The better you understand how risk behaves in your system, the more resilient you become.

A closing thought: risk management as everyday resilience

If you look at ORM as a chore you cross off a to-do list, you’ll miss the point. It’s about building resilience—the ability to absorb shocks, adapt on the fly, and keep delivering despite uncertainty. The steps matter, but the bigger story is how teams talk about risk, how they iterate on what works, and how they weave risk awareness into daily routines. In the end, that steady, adaptive mindset is what makes operations not just safer, but sharper and more trustworthy.

If you’re exploring ORM concepts with fresh eyes, you’ll notice a simple thread running through all of this: you don’t need grandiose gestures to make a difference. Clear identification, honest assessment, and practical controls—supported by the right resources—can transform a routine task into something sturdier and smarter. That’s the core idea behind ORM, and it’s a mindset you can carry into any operation, big or small.