Why is assessing risk critical in ORM?

Assessing risk is fundamental in Operational Risk Management because it enables organizations to identify and prioritize risks based on their likelihood of occurrence and potential impact on the business. This prioritization is vital for effective risk management because it helps decision-makers allocate resources appropriately, ensuring that the most significant risks receive attention and mitigation efforts. By understanding which risks pose the greatest threat to the organization's objectives, organizations can develop targeted strategies to manage those risks, ultimately enhancing resilience and safeguarding business operations. Effective risk assessment also fosters a proactive risk culture, encouraging the continuous monitoring of risks and the adjustment of strategies as conditions change. This approach is essential for maintaining a robust operational risk framework that supports overall business objectives and sustainability.